Pure services exemption under GST denied where solid waste management contract included goods and composite supply elements.

Entry 3 of Notification No. 12/2017-Central Tax (Rate) applies only to pure services supplied to specified governmental recipients in relation to municipal or Panchayat functions, and not to composite supplies involving goods. The solid waste management contract with the Notified Area Authority included vehicles, fuel, tools, machinery and protective gear, showing that goods formed part of the supply. The service therefore did not qualify as pure services under the exemption entry, and GST exemption was denied.

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Issues: Whether the solid waste management service provided under the agreement with Notified Area Authority, Vapi is exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as pure services provided in relation to a municipal function.

Analysis: Entry 3 of Notification No. 12/2017-Central Tax (Rate) exempts pure services, excluding works contract service or other composite supplies involving supply of goods, when provided to specified governmental recipients in relation to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W. The service was classified under Heading 9994 in Notification No. 11/2017-Central Tax (Rate), but the agreement showed that the contract value included vehicles, fuel, tools, machinery, protective gear and similar items. The terms of the contract therefore indicated involvement of goods along with services, and the consideration was inclusive of taxes. On that basis, the supply could not be treated as pure services for the exemption entry.

Conclusion: The exemption under Entry 3 of Notification No. 12/2017-Central Tax (Rate) was not available, and the solid waste management service was not exempt from GST.

Ratio Decidendi: Exemption under the pure services entry applies only where the supply is confined to services and does not involve supply of goods or a composite supply.

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