Order Date – 15 April 2024

Facts – 

• The Applicant, M/s. Crystal Infosystems and Services is involved in supply of Teachers and Lecturers to BBMP schools and colleges on outsourcing basis, which is a pure service as no goods are associated with the supply. 
• They are charging 18% GST at present, but the recipient BBMP, being a Municipality (Municipal Corporation), is not paying GST on the basis that the service is of pure nature, BBMP is a Municipality constituted by Government of Karnataka and the service is in relation to the functions covered under 12th Schedule, Article 243 W of Constitution of India and thus the services are exempted under entry number 3 or 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

Issue – 

• Whether the contract of providing 'supply of Teachers and Lecturers to BBMP schools and colleges on outsourcing basis' are exempted from both GST?

Order – 

• The AAR observed that the impugned services are being supplied to the BBMP, a division in the Bruhat Bengaluru Mahanagara Palike which is Bangalore City Corporation, established under Karnataka Municipal Act 1976 and now working under The Bruhat Bengaluru Mahanagara Palike Act 2020. The constitution of BBMP is a municipality by virtue of Article 243 Q of the Constitution of India and thus to be considered as Municipality as defined under Article 243 P of the Constitution of India. Thus it qualifies to be a Local Authority as defined under Section 2(69) of the CGST Act 2017.
• Thus the impugned services of supply of teachers/lecturers is meant for imparting education to the students and hence it is part of promotion of educational aspects. Thus the impugned services are provided by way of an activity in relation to the function of promotion of educational aspects entrusted to the Municipality (BBMP) under article 243W of the Constitution.
• The service of supply of teachers/lecturers to schools/colleges run by BBMP, on outsource basis is covered under pure services being provided to a local authority (BBMP) by way of an activity in relation to a function "Promoting educational aspects" entrusted to a Municipality under article 243W of the Constitution of India and hence are exempted in terms of entry number 3 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.