Sub-contractor's supply of manpower to principal contractor not exempt under Entry 3 or 3A of Notification 12/2017; recipient must be government, not private contractor: AAAR Telangana

The Authority held that the exemption is linked to the identity of the recipient of the supply, and a sub-contract to a private company does not satisfy the recipient condition merely because the ultimate project is a government project.

The Telangana Appellate Authority for Advance Ruling has upheld the ruling that services supplied by a sub-contractor to a principal contractor executing a government water supply project under Mission Bhagiratha are not exempt under Serial Nos. 3 or 3A of Notification No. 12/2017-Central Tax (Rate) [In Re: M/s Immense Construction Company].

Members M. Raghunandan Rao and Arun Kumar held that since the appellant's immediate recipient was M/s The Indian Hume Pipe Company Ltd — a private company — the fundamental recipient condition stood unsatisfied. The work order itself specified engagement for supplying manpower at rates per man-day with an express GST provision at 9% CGST and 9% SGST.

The Authority also rejected reliance on the Supreme Court's judgment in Taghar Vasudeva Ambrish, holding that the said decision concerned a residential dwelling exemption under Entry 12 with no recipient-specific condition — materially different from Entry 3/3A which expressly restricts exemption to specified government recipients.

Invoking the principle from Commissioner of Customs v. Dilip Kumar that exemption notifications must be interpreted strictly, the Authority confirmed that the supply attracted GST at 18 per cent.

2026-juristway.com-2936-AAAR(Telangana)-GST  |  AAAR, Telangana  |  AAAR. COM/03/2024  |  23.09.2026