Dredging work for drain qualifies as composite supply with GST exemption under Notification 9/2017 Section 3A

AAR-WB ruled that dredging work for Delhi Government's Najafgarh Drain constitutes composite supply of goods and services, where goods value is less than 25% of total supply value. The work falls under public health sanitation per Article 243W of Constitution. Since material cost is under 5% of total work value and involves municipal functions, the supply qualifies for GST exemption under Notification No. 9/2017-Integrated Tax (Rate) Sl. No. 3A for composite supplies to government authorities.

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Issues Involved:
The issues involved in the judgment are the interpretation of provisions of the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017, the classification of services provided under a government contract, and the applicability of specific notifications related to GST rates.

Interpretation of Provisions:
The judgment clarifies that the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017 have similar provisions unless specifically mentioned otherwise. The expression 'GST Act' refers to both acts. The applicant was awarded a work order by the Government of Delhi for dredging in Najafgarh Drain, and the contract mainly involves dredging and earthwork excavation.

Advance Ruling Application:
The applicant raised questions regarding the classification of the supply under specific GST notifications. The application was admitted for questions related to the rate of GST applicable in the case.

Submission of the Applicant:
The applicant argued that the work undertaken falls within the purview of public health sanitation conservancy and solid waste management. They highlighted the nature of the work, emphasizing it as a pure service work with minimal material consumption.

Submission of the Revenue:
The revenue authority did not express any view on the matter.

Observations & Findings:
The Authority examined the nature of the work involving desilting and cleaning of Najafgarh Drain. It was determined that the work falls under the category of public health sanitation conservancy and solid waste management. The records submitted by the applicant confirmed the presence of goods in the supply, albeit in a small percentage.

Judgment & Ruling:
The Authority ruled that the supply of services for removal of hump by dredging at Najafgarh Drain, awarded by the Irrigation and Flood Control Department, Government of Delhi, is exempted from tax under Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017.

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