Composite supply of ash evacuation services qualifies for GST exemption when linked to Panchayat functions and treated as a principal earthmoving service.

Excavation, earthmoving and ancillary transportation of settled ash from ash ponds were treated as a composite supply of services, with excavation and earthmoving as the principal supply and transport as incidental. The recipient was regarded as a Panchayat/local authority, and the work was connected to functions entrusted under the West Bengal Panchayat Act, 1973 and Article 243G. On that basis, the supply was held to fall within SAC 995433 and to qualify for exemption under Sl. No. 3A of Notification No. 12/2017-Central Tax (Rate), read broadly with the GST exemption framework for functions of Panchayats and Municipalities.

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Issues: Whether the applicant's service of evacuation and disposal of settled ash from the ash ponds, involving excavation, earthmoving and ancillary transportation, is a composite supply of services classifiable under SAC 995433 and exempt under Sl. No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017.

Analysis: The supply was found to be a composite supply of services, with excavation and earthmoving as the principal supply and transportation of excavated ash as ancillary. The recipient, Purba Medinipur Zilla Parishad, was treated as a Panchayat and local authority. The work was traced to powers and responsibilities entrusted to the Panchayat under the West Bengal Panchayat Act, 1973 and Article 243G of the Constitution of India, in relation to public welfare functions. The exemption under Sl. No. 3A was read broadly in light of the GST exemption notifications and the explanatory circular, which extended the earlier service-tax exemption principle to supplies made in relation to functions of Panchayats and Municipalities.

Conclusion: The supply is a composite supply classifiable under SAC 995433 and is exempt under Sl. No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017.

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