Tax Assessment Overturned: Solid Waste Management Services Granted Potential Exemption Under Notification 12/2017

HC allowed writ petition challenging tax assessment for solid waste management services. Court set aside assessment orders and directed reassessment, instructing tax authorities to review evidence regarding exemption under Notification No. 12/2017. Petitioner's activities were deemed potentially exempt from BGST Act, with directions to provide tax deduction details and reconsider tax liability.

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Issues involved:
The judgment deals with the challenge to an assessment order under the Bihar Goods and Services Tax Act, 2017, the applicability of tax levy on solid waste management activities, and the interpretation of works contract under the BGST Act.

Issue 1: Challenge to assessment order and deprivation of consideration in second appeal
The petitioner challenges an assessment order confirmed by the first Appellate Authority under the BGST Act, citing deprivation of consideration in the second appeal due to the non-constitution of the Tribunal. The petitioner contends that the levy is not sustainable as the activity of solid waste removal is exempted under a specific notification, and does not qualify as a works contract under the BGST Act.

Issue 2: Tax levy based on deductions under Income Tax Act
The petitioner, a Cooperative Society, received a notice quantifying tax and penalty for the Assessment Year 2019-20, based on deductions made by the Nagar Parishad under the Income Tax Act. The petitioner argues that the mere deduction of direct tax does not warrant a levy under the BGST Act, which is an indirect tax.

Issue 3: Exemption under Notification No. 12/2017 and legality of jurisdiction under Section 74
The petitioner filed an appeal citing Notification No. 12/2017 which grants exemption from tax payment in relation to functions entrusted to a Municipality. The petitioner contests the jurisdiction under Section 74 as illegal and improper, especially considering a similar appeal by another assessee was allowed by the Appellate Authority.

Issue 4: Interpretation of works contract and exemption under BGST Act
The Government Advocate argues that the petitioner's work of solid waste collection and disposal constitutes a works contract under the BGST Act. However, the petitioner asserts that the activity does not involve a transfer of goods as required by the definition of works contract. Reference is made to exemptions granted by the Central Board of Indirect Taxes and Customs.

Conclusion:
The High Court set aside the assessment orders and directed the petitioner to provide details of tax deductions at source made by the Municipality under the Income Tax Act. The Assessing Officer is instructed to consider the evidence provided by the petitioner regarding the non-exigibility of tax on solid waste management activities, and pass orders accordingly. The writ petition was allowed with these directions, emphasizing the exemption of the petitioner's activities from the BGST Act.

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