New Delhi, Oct 24 : Private and public sector agencies providing goods and services and collecting charges from clients on behalf of the government will not be exempt from paying GST and have to pay the tax at applicable rates, the Telangana Authority for Advance Rulings (AAR) has ruled. Services by the Central government, state government, Union Territory or local authority are exempt from GST but this rule has a few exception, including services provided to business entities. The AAR Telangana ruled that e-procurement transaction fee collected by an agency on behalf of the government is chargeable to GST. According to a senior partner at AMRG & Associates, Rajat Mohan, the authority also clarified that neither the services rendered by a business entity to the government nor its activity acting on behalf of the government, qualify to be treated at par with services rendered purely by the government or its agencies that are exempt from GST. The AAR ruling came on an application by the Telangana State Technology Services Ltd (TSTSL), a public sector undertaking and a service agency to the Telangana government and its departments relating to IT and related services. One of such services provided by the TSTSL is acting as a fund manager on behalf of state IT E&C Department in executing e-procurement process. TSTSL, as fund manager, receives entire amounts such as e-procurement transaction charges into a designated bank account. On receipt of the e-Procurement Transaction Fees (inclusive of GST), the TSTS is paying 18 per cent GST on the fees on a monthly basis and recognises its share of service charges and again pays GST at 18 per cent on a monthly basis. The balance amounts are utilised for IT expenditure towards the specific requirements of the departments concerned. In its plea, the applicant said that he is acting as a pure agent on behalf of the state government which is floating tenders amounting to supply of services and argued that such supply may not attract tax under CGST Act, 2017. However, the AAR clearly distinguished between services provided by government and someone on behalf of the government and held that the latter activity is taxable. /IANS