Municipal waste-management exemption applies to pure services, but a Bio-CNG composite supply does not qualify under GST.

Pure services provided to a local authority in relation to a municipal function under Article 243W qualify for exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate). Contracts for bio-mining of legacy waste, reclamation of dump sites, maintenance of micro compost centres, and collection and removal of wet and bulk waste fall within that exemption because they are treated as solid waste management services connected with municipal functions. By contrast, a wet-waste-to-Bio-CNG arrangement structured as a design, finance, build, operate and transfer project is a composite supply involving goods and services, so it does not satisfy the pure service condition and is not exempt.

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Issues: (i) Whether contracts for solid waste management, including removal of legacy waste through bio-mining, maintenance of micro compost centres, and labour contracts for collection and removal of wet and bulk waste, are exempt under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017; (ii) Whether the contract for conversion of wet waste into Bio-CNG at the Central Asphaltic Plant qualifies for the same exemption.

Issue (i): Whether contracts for solid waste management, including removal of legacy waste through bio-mining, maintenance of micro compost centres, and labour contracts for collection and removal of wet and bulk waste, are exempt under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The exemption applies to pure services provided to a local authority in relation to a function entrusted to a municipality under Article 243W of the Constitution. The contracts for bio-mining and reclamation of dump sites were found to be pure services connected with solid waste management. The maintenance of micro compost centres and the labour contracts for collection and removal of waste were also found to be pure services rendered to municipal bodies. The activity of solid waste management is within the municipal function contemplated in the Twelfth Schedule, and the recipients were local authorities.

Conclusion: The contracts described in this issue are exempt from GST under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Issue (ii): Whether the contract for conversion of wet waste into Bio-CNG at the Central Asphaltic Plant qualifies for exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The Bio-CNG arrangement was structured as a design, finance, build, operate and transfer project involving construction of plant and machinery, support infrastructure, operation, sale of output, and transfer of the facility at the end of the period. This made the supply a composite supply involving goods and services, not a pure service. Since the exemption is confined to pure services, the contract did not satisfy the basic condition for exemption.

Conclusion: The Bio-CNG contract is not exempt from GST under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Final Conclusion: The ruling grants exemption for the pure-service waste management and bio-mining contracts with municipal bodies, but denies the exemption for the Bio-CNG project because it is not a pure service.

Ratio Decidendi: An exemption for services in relation to municipal functions under Notification No. 12/2017-Central Tax (Rate) is available only where the supply is a pure service provided to a local authority in connection with a function entrusted under Article 243W of the Constitution; a composite supply involving construction and transfer of a facility does not qualify.

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