Tamil Nadu Authority for Advance Ruling: T.G. Venkatesh, Additional Commissioner of GST & Central Excise, and K. Latha, Joint Commissioner of State Tax has held that the contracts relating to solid waste management and removal of legacy waste dumped at bio-mining sites, except Bio-CNG are exempted from GST.
Factual Background of the case
The applicant is in the bio-waste management sector and does all types of waste management like collection and transportation, manpower supply, bio-mining, micro composting center, and bio- CNG gas.
An application was filed by the applicant, before the Tamil Nadu Authority for Advance Ruling to seek an Advance Ruling on the following:
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Whether contracts received from various city corporations and a municipality towards solid waste management are exempted from GST?
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Whether contracts received from various city corporations and a municipality towards the removal of legacy waste dumped at dump sites through Bio-Mining process is exempted from GST?
Analysis and Decisions
The Bench referred to the definition of ‘pure services' as defined under Sl. No.3 of Notification 12/2017- C.T. (Rate) dated 28-06-2017. According to the definition, “Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243-G of the Constitution or in relation to any function entrusted to a Municipality under Article 243-W of the Constitution.”
In the light of the above definition, the Bench gave the following decision-
A. Removal of Legacy waste
The Bench observed that removal of legacy waste and reclamation of land is a process whereby the accumulated legacy solid waste is segregated, and the dump site is cleared to reclaim the lands for better usage. Therefore, the Bench held that the contracts received from various city corporations and municipalities towards the removal of legacy waste dumped at the site through the bio-mining process are pure services rendered to local authority and such act is being entrusted to a municipality under Art. 243-W of the Constitution. Hence, such contracts are eligible for exemption from GST.
B. Micro-composting and labour services
The Bench observed that the applicant, to carry out the activity of removal of legacy waste, needs to maintain micro compost centers and employ labourers and operators in order to carry out the service. Therefore, the bench held that contracts entered into for Maintenace of micro-composting and labour contracts for collection of solid waste are ‘pure services' rendered to local authorities and are activities rendered to local authorities and entrusted to the municipality under Art. 243-W of the Constitution.
C. Production of Bio-CNG
Further, the Bench opined that conversion of wet waste into BIO-CNG does not fall under the pure services as the applicant needs to set up a separate plant and machinery and structure as a new product is being produced and no service is being rendered to a local authority or the Government. Therefore, the bench held that the contract on Bio-CNG does not qualify as pure services. Hence, it was not eligible for GST exemption.
[Srinivas Waste Management Services Pvt. Ltd., Or, No. 23/AAR/2022, decided on 30-06-2022]
