GST exemption for municipal waste services also excludes TDS and registration when turnover is wholly exempt.

Conservancy and solid-waste management services supplied as a pure service to a municipal corporation were treated as exempt from GST because they related to functions entrusted to a municipality under Article 243W and fell within the relevant exemption entry for public health, sanitation, conservancy and solid waste management. As the supply was exempt, the TDS provisions under section 51 and the related notifications did not apply, because deduction at source operates only for taxable supplies. Where an assessee's turnover consists entirely of exempt goods or services, section 23(1)(a) excludes liability to registration under the GST Act, so no registration was required on that basis.

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Issues: (i) whether the applicant's conservancy and solid-waste management services to the municipal corporation were exempt under the GST exemption notification; (ii) whether tax deduction at source provisions applied to such exempt supply; and (iii) whether an assessee supplying only exempt goods and services was liable to registration under the GST Act.

Issue (i): whether the applicant's conservancy and solid-waste management services to the municipal corporation were exempt under the GST exemption notification.

Analysis: The supply consisted of collection, segregation, transport and disposal of municipal solid waste for a municipal corporation, which is a local authority. The activity was found to be a pure service in relation to functions entrusted to a municipality under Article 243W of the Constitution and falling within the relevant entry on public health, sanitation, conservancy and solid waste management. The exemption applied to such pure services supplied to a local authority.

Conclusion: The supply was exempt from GST under the relevant exemption notification, in favour of the assessee.

Issue (ii): whether tax deduction at source provisions applied to such exempt supply.

Analysis: The TDS provisions under section 51 operate only in relation to payment for taxable goods or services. Since the supply was held to be exempt, the statutory basis for deduction at source did not arise, and the associated notifications implementing TDS were inapplicable to that supply.

Conclusion: The TDS provisions and related notifications did not apply, in favour of the assessee.

Issue (iii): whether an assessee supplying only exempt goods and services was liable to registration under the GST Act.

Analysis: The ruling recorded that supplies such as unbranded organic manure and municipal waste were exempt, and where turnover consists entirely of exempt supplies, section 23(1)(a) excludes liability to registration.

Conclusion: The applicant was not liable to registration if its turnover consisted entirely of exempt supplies, in favour of the assessee.

Final Conclusion: The applicant's supplies were treated as exempt, the TDS regime was held inapplicable to those supplies, and registration was not required on the basis of wholly exempt turnover.

Ratio Decidendi: A supply to a local authority is exempt when it is a pure service rendered in relation to a municipality's constitutionally entrusted functions, and TDS and registration provisions do not apply where the supply and turnover are wholly exempt.

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