The West Bengal Authority for Advance Ruling (WB AAR) has delivered an important ruling clarifying the GST exemption available on security and scavenging services supplied to Government medical colleges and hospitals. The ruling settles a recurring dispute faced by manpower service providers engaged by Government healthcare institutions, particularly on whether such services qualify as “pure services” under Notification No. 12/2017–Central Tax (Rate).
This article analyses Order No. 23/WBAAR/2025-26 dated 10.12.2025, passed in the case of Ex-Servicemen Resettlement Society, and explains its legal reasoning, constitutional linkage, and practical impact on GST litigation.
Facts of the Case
The applicant, Ex-Servicemen Resettlement Society, is a registered entity engaged in supplying manpower services on a contractual basis to:
- Government Medical Colleges & Hospitals
- District Hospitals
- Sub-Divisional Hospitals
- Other hospitals under the Government of West Bengal
The services provided comprised:
- Security personnel, and
- Scavenging staff
The applicant raised monthly invoices containing only:
- Wages
- Employer’s contribution to EPF & ESIC
- Annual bonus (paid once during Durga Puja)
No material, equipment, or consumables were supplied. The applicant had been charging and paying GST @18% on such invoices till date.
Issue Raised Before the Authority
The applicant sought an advance ruling on the following question:
“Whether the security and scavenging services provided by the applicant to various Medical Colleges and hospitals of Government of West Bengal is exempted from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017?”
The application was admitted under Section 97(2)(b) of the CGST Act, 2017.
Relevant Legal Provision – Notification No. 12/2017
The Authority examined Entry No. 3 of Notification No. 12/2017, which exempts:
“Pure services (excluding works contract service or other composite supplies involving supply of goods) provided to the Central Government, State Government, Union Territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution.”
From the above, three cumulative conditions must be satisfied:
- The supply must be pure services
- The recipient must be Government/ local authority/ governmental authority
- The activity must be in relation to functions under Articles 243G or 243W
Whether the Services Are “Pure Services”
The Authority noted that the term “pure services” is not defined under GST law. However, Entry 3 itself clarifies that pure services exclude:
- Works contract services, and
- Composite supplies involving goods
Based on invoices examined, the AAR found that:
- The applicant supplied only manpower
- Consideration was limited to wages, statutory dues, and bonus
- No supply of goods whatsoever was involved
Accordingly, the supply of security services was unequivocally held to be pure services.
“Documentary invoices were produced before the Authority only for security services. In respect of scavenging services, no invoices were placed on record; the Authority relied on the applicant’s written submission dated 10.09.2025 confirming supply of scavenging staff to Government hospitals.”
Recipient of Service – Govt of West Bengal
The services were provided to Medical Colleges and hospitals run by the Government of West Bengal. The Authority held that such hospitals act as representatives of the State Government.
Thus, the second condition of Entry 3, supply to the State Government, stood satisfied.
Constitutional Linkage – Articles 243G and 243W
The Authority placed significant reliance on constitutional provisions.
Article 243G – Eleventh Schedule (Panchayats)
- Entry 23: Health and sanitation, including hospitals, primary health centres and dispensaries
Article 243W – Twelfth Schedule (Municipalities)
- Entry 6: Public health, sanitation conservancy and solid waste management
The Authority emphasised that the notification uses the phrase “any activity in relation to”, which has a wide amplitude.
Security and scavenging services were held to be essential support services, without which:
- Hospitals cannot function effectively, and
- Delivery of public health services would be severely impaired
Accordingly, these services were held to be directly related to public health and sanitation functions entrusted to Panchayats and Municipalities under the Constitution.
Final Ruling of the West Bengal AAR
The Authority ruled as under:
“The security and scavenging services provided by the applicant to Medical Colleges and hospitals of the Government of West Bengal are exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.”
The ruling was given in affirmative, granting absolute exemption (Nil rate).
Key Takeaways / Litigation Impact
1. Manpower-only services qualify as pure services: Where consideration is restricted to wages and statutory dues, the supply will not lose its character as pure services.
2. Support services are covered, not just core sovereign functions: The ruling reinforces that activities “in relation to” public health include ancillary and support services such as security and sanitation.
3. Documentary evidence is preferable but not fatal: Even though invoices for scavenging services were not produced, the AAR accepted written submissions—useful guidance in evidentiary disputes.
4. Strong precedent for Government hospital contractors: Contractors supplying housekeeping, sanitation, security, or similar manpower services to Government hospitals can rely on this ruling to claim exemption.
5. Potential refund and litigation defence: Service providers who have paid GST under protest may explore refund claims, subject to unjust enrichment, or use this ruling as a defence in audits and SCNs.
Conclusion
The West Bengal AAR ruling provides authoritative clarity that security and scavenging services supplied to Government hospitals are exempt pure services under GST. By harmonising GST exemption notifications with constitutional functions under Articles 243G and 243W, the ruling strengthens the legal position of Government service contractors and sets a persuasive benchmark for future GST litigation.
References:
WB AAR Ruling dated 10/12/2025 on GST Exemption for Security and scavenging services provided to hospitals under Notification No. 12/2017 – Central Tax (Rate)