GST exemption granted for bio-medical waste collection services under Entry 3 of Notification 12/2017 as constitutional sanitation function

AAR West Bengal ruled on GST exemption for bio-medical waste collection and disposal services. The applicant contracted with State Government for waste collection from clinical establishments, engaging Medicare as sub-contractor. AAR held that applicant's services to State Government qualify for exemption under Entry 3 of Notification 12/2017 as the services relate to sanitation functions listed in Eleventh/Twelfth Schedule of Constitution. However, AAR declined to rule on sub-contractor's exemption eligibility since applicant was service recipient, not supplier, in those transactions.

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Issues Involved:
1. Applicability of Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the applicant.
2. Applicability of Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the sub-contractor of the applicant.
3. Applicability of Entry Number 75 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the sub-contractor of the applicant.

Issue-Wise Analysis:

1. Applicability of Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the Applicant:

The applicant entered into an agreement with the Department of Health Services, Government of West Bengal for the collection and disposal of bio-medical waste from various clinical establishments. The applicant contends that these services do not involve any supply of goods and are provided to the State Government, thus qualifying for exemption under Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017.

The conditions for exemption under Entry Number 3 are:
- The service must be a pure service (excluding works contract service or other composite supplies involving supply of any goods).
- The service recipient must be the Central Government, State Government, Union territory, local authority, Governmental authority, or Government Entity.
- The service must be in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or to a Municipality under Article 243W of the Constitution.

The Authority found that the services provided by the applicant meet these conditions. Specifically, the services relate to "Health and sanitation, including hospitals, primary health centres and dispensaries" under the Eleventh Schedule and "Public health, sanitation conservancy and solid waste management" under the Twelfth Schedule. Therefore, the services provided by the applicant to the State Government for the collection and disposal of bio-medical waste are covered under Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017, and are exempt from GST.

2. Applicability of Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the Sub-Contractor of the Applicant:

The applicant sought a ruling on whether the services provided by its sub-contractor, Medicare, also qualify for exemption under Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017. The Authority observed that the applicant is the recipient of services from the sub-contractor and thus cannot seek an advance ruling on this matter. The GST Act allows advance rulings only on supplies undertaken or proposed to be undertaken by the applicant. Therefore, no ruling was given on this question.

3. Applicability of Entry Number 75 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the Sub-Contractor of the Applicant:

Similarly, the applicant sought a ruling on whether the services provided by its sub-contractor qualify for exemption under Entry Number 75 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017. The Authority reiterated that the applicant is the recipient of services in this context and cannot seek an advance ruling. Therefore, no ruling was given on this question.

Ruling:

1. The services provided by the applicant to the State Government for the collection and disposal of bio-medical waste from various clinical establishments are covered under Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 and are exempt from GST.
2. No ruling can be given on the applicability of Entry Number 3 and Entry Number 75 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the sub-contractor of the applicant, as the applicant is the recipient of services in these cases.

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