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of <h1>Municipal Services Exempt from GST; TDS Provisions Inapplicable</h1> <h3>In Re: M/s. Time Tech Waste Solutions Private Limited</h3> The Bench found the Applicant's services to the municipal corporation qualified as pure services under exemption notifications, exempting them from GST. ... Classification of supply - pure service or a composite supply? - Applicant supplies the organic manure and solid waste scrap if any to customers - whether the supply being made is pure service or a composite supply, where supply of goods does not exceed more than 25% of the value of the supply? - whether the recipient is government, local authority, governmental authority or a government entity? - whether the supply is being made in relation to any function entrusted to a panchayat or a municipality under the Constitution? - HELD THAT:- The recipient is a municipal corporation, which is a local authority as defined under section 2(69) of the GST Act. The Applicant is made responsible for collection, segregation, storing, transport and disposal of municipal solid waste from the municipal area of the BMC. They will organize a house-to-house collection of municipal solid waste, collect waste from slums, hotels, slaughterhouses etc. They will segregate the non-bio-degradable and inert waste and dump it at the Landfill within the Project premise. The Applicant may build a suitable Processing and Composting Plant. The Applicant shall bear the expenditure for maintenance of the collection equipment and pay rental on the equipment taken on lease from the BMC. The consideration to be paid measures the work done in terms of the quantity of the garbage lifted and removed. Based on the above document, it may, therefore, be concluded that the Applicant’s supply to BMC is pure service. Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. Sl.No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant’s supply to HMC is a function mentioned under Sl.No. 6 of the Twelfth Schedule - Applicant’s service to BMC, therefore, is exempt under Sl No. 3 of the Exemption Notification. Section 51(1) of the Act provides that the Government may mandate inter-alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both. As the Applicant is making an exempt supply to the BMC, the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply - Supply of unbranded organic manure, unless packed in containers, is classifiable under HSN 3101. Municipal waste is classifiable under HSN 3825. Supplies of both of them are exempt under Sl Nos. 108 and 110 of the Exemption Notifications (Goods), respectively. If the Applicant’s turnover consists entirely of exempt supplies, he is not liable to registration in terms of section 23(1)(a) of the GST Act. Issues:1. Admissibility of the Application2. Submissions of the Applicant3. Observations and findings of the BenchAdmissibility of the Application:The Applicant provides conservancy/solid waste management services to a municipal corporation and seeks clarification on the applicability of notifications regarding TDS and the requirement for GST registration. The questions raised are deemed admissible under the GST Act, as confirmed by the concerned revenue officer, leading to the admission of the application.Submissions of the Applicant:The Applicant argues that their services fall under exemptions provided for pure services to local authorities and composite supplies involving goods and services. They maintain that their activities align with functions entrusted to a Municipality under the Constitution, making them eligible for exemption under specific notifications. The Applicant further explains their service details, including waste collection, segregation, disposal, and organic manure production, all falling under exempt categories.Observations and findings of the Bench:The Bench analyzes the Circular clarifying service tax exemptions continuing under GST for services to government entities, local authorities, and public welfare functions. The Applicant's eligibility for exemption is assessed based on the nature of supply, recipient, and function under the Constitution. The Bench concludes that the Applicant's services to the municipal corporation qualify as pure services under the exemption notifications. Additionally, the TDS notifications are found inapplicable due to the nature of the Applicant's exempt supplies. The classification and exemption status of the goods supplied by the Applicant are also considered, determining the Applicant's exemption from GST registration if their turnover solely consists of exempt supplies.The ruling confirms the Applicant's supply to the municipal corporation as exempt from GST, clarifies the inapplicability of TDS provisions to the exempt supply, and states that GST registration is not required if the turnover comprises entirely of exempt supplies.
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