The Applicant is liable to pay GST on the portion of the payment received on account of the bonus paid or payable to the persons it deploys security personnel.

Applicant Supplier provides security and scavenging service to various government hospitals and bills to the state government in two parts

a) Fixed part depending on Bid known as Service Charge

b) Variable part based on minimum wages as per government regulations (including ESI, PF etc)

Now, Health and Family Welfare department of the State Government directed that contractual security personnel be paid bonus @ 8.33% once in a year. Therefore, applicant made a seperate bill for claim of bonus (without GST).

Question before AAR was whether such bill of reimbursment of bonus is liable to GST?

AAR Held that the agreement does not create a master and servant relation between the state government and the security personnel. Therefore, the same is not guided by Para 1 to Schedule III i.e Services by an employee to the employer in the course of or in relation to his employment.