AAR classifies bio-mining and waste remediation services under SAC 9994 with 18% GST but grants exemption under Notification 12/2017

AAR Tamil Nadu ruled on classification of bio-mining and waste remediation services provided to Tumakuru City Corporation. The services were classified under SAC heading 9994 attracting 18% GST, covering both site remediation (SAC 999441) and non-hazardous waste treatment (SAC 999433). However, the services qualified for exemption under Notification 12/2017 as they constituted pure services provided to a local authority for functions entrusted to municipalities under Article 243W of the Constitution. The authority declined to rule on whether the Smart City Corporation qualified as governmental authority, finding it outside the scope of advance ruling provisions.

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Issues Involved:
1. Classification of services provided by the applicant.
2. Exemption of services under SI. No. 3 of Notification No. 12/2017.
3. Status of M/s. Tumkur Smart City Corporation as a "Governmental Authority".

Summary of Judgment:

1. Classification of Services:
The applicant, a GST Registrant, provides services related to Municipal solid waste management solutions, specifically "Remediation of open dump and reclamation of space at Ajjagondanahalli, Tumakuru" through bio-mining. The service is classified under SAC 9994, which includes "Sewage and waste collection, treatment and disposal and other environmental protection services," attracting GST at 18% (9%-CGST + 9% SGST, or 18%-IGST).

2. Exemption Under SI. No. 3 of Notification No. 12/2017:
The services provided by the applicant qualify as "pure services" and are provided to Tumakuru City Corporation, a "local authority." These services fall under the functions entrusted to a Municipality under Article 243W of the Constitution, specifically "Public health, sanitation conservancy and solid waste management." Therefore, the services are exempted under SI. No. 3 of Notification No. 12/2017 - CT dated 28.06.2017, as amended.

3. Status of M/s. Tumkur Smart City Corporation:
The query regarding whether M/s. Tumkur Smart City Corporation is a "Governmental Authority" was not addressed. The authority determined that M/s. Tumkur Smart City Limited is a Special Purpose Vehicle (SPV) created to facilitate the project and is neither the service provider nor the service recipient in this case. Consequently, this query does not merit consideration and is not covered under Section 97(2) of the CGST/TNGST Act, 2017.

Ruling:
(i) The service provided by the applicant, i.e., bio-mining of waste and remediation of the site, is classified under SAC 9994, attracting GST at 18%.
(ii) The service provided to M/s. Tumkur City Corporation is exempted under SI. No. 3 of Notification No. 12/2017 - CT dated 28.06.2017, as amended.
(iii) The query regarding the status of M/s. Tumkur Smart City Corporation is not covered under Section 97(2) of the CGST/TNGST Act, 2017, and hence no ruling is provided.

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