2024 (2) TMI 1352 - AAR - GST

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 ... Classification under SAC 9994 - Sewage and waste collection, treatment and disposal and other environmental protection services - Site remediation and waste treatment as non-hazardous waste treatment and disposal services - Exemption under Notification No. 12/2017 - Sl. No. 3 for pure services to a local authority in relation to functions entrusted to a Municipality under Article 243W - Local authority / Municipality under Article 243Q and Twelfth Schedule (Article 243W) - solid waste management as a municipal function - Advance ruling jurisdiction under Section 97(2) - matters eligible for advance rulingClassification under SAC 9994 - Sewage and waste collection, treatment and disposal and other environmental protection services - Site remediation and waste treatment as non-hazardous waste treatment and disposal services - Services of bio-mining, remediation of open dump and disposal of processed waste are classifiable under SAC heading 9994. - HELD THAT: - The Agreement and project scope show the applicant performs bio-mining, segregation, processing and scientific disposal of legacy waste and undertakes reclamation of an existing dumpsite. The Scheme of Classification of Services places site remediation under Group 99944 (notably SAC 999441) and waste treatment and disposal under Group 99943 (notably SAC 999433 for non-hazardous waste). Because the applicant's operation comprises both reclamation/site remediation and processing/disposal of non-hazardous legacy waste, the Authority concludes the composite operation falls broadly within SAC 9994 (Sewage and waste collection, treatment and disposal and other environmental protection services) attracting GST at 18%. [Paras 9, 10]The services are classifiable under SAC 9994 and attract GST at 18% (9% CGST + 9% SGST or 18% IGST).Exemption under Notification No. 12/2017 - Sl. No. 3 for pure services to a local authority in relation to functions entrusted to a Municipality under Article 243W - Municipal function - solid waste management under Twelfth Schedule (Article 243W) - Local authority / Municipality as service recipient - Services provided by the applicant to Tumakuru City Corporation qualify as exempt under Sl. No. 3 of Notification No. 12/2017, being pure services provided to a local authority in relation to a municipal function (solid waste management). - HELD THAT: - The entry at Sl. No. 3 requires (i) pure services, (ii) services provided to Central/State/Union territory/local authority or governmental authority, and (iii) services in relation to functions entrusted to a Panchayat or Municipality under Articles 243G/243W. The Agreement and scope establish the applicant's work is a pure service (no supply of goods, not a works contract or composite supply) involving bio-mining, treatment and scientific disposal. Tumakuru City Corporation is established as a Municipal Corporation (a local authority) and solid waste management is listed in the Twelfth Schedule (Article 243W) as a municipal function; the Solid Waste Management Rules, 2016 further require local authorities to investigate and undertake bio-mining/bio-remediation where feasible. Applying these facts to the exemption conditions, the Authority holds the services to Tumakuru City Corporation are exempt under Sl. No. 3 of Notification No. 12/2017. [Paras 9, 10]The services rendered to Tumakuru City Corporation are exempt under Sl. No. 3 of Notification No. 12/2017.Definition of Governmental Authority and advance ruling eligibility under Section 97(2) - Scope of matters for which an advance ruling can be sought - The Authority refrained from ruling on whether Tumakuru Smart City Limited (the SPV) is a 'Governmental Authority' because that question is not properly framed within Section 97(2) for which an advance ruling can be sought in the circumstances of this case. - HELD THAT: - The factual and contractual matrix shows Tumakuru Smart City Limited is an SPV created to facilitate tendering and payments, while Tumakuru City Corporation is the employer/contracting local authority that entered into the project agreement with the applicant. Given that the SPV is not the service recipient in the agreement and the applicant's queries regarding that entity lacked clarity, the Authority concluded the question concerning the SPV's status does not fall within the clauses (a)-(g) of Section 97(2) as a matter properly amenable to advance ruling here. Accordingly, the Authority declines to answer that query. [Paras 8, 9, 10]The question whether Tumakuru Smart City Limited is a 'Governmental Authority' is not covered under Section 97(2) in the facts before the Authority, and no ruling is given on that point.Final Conclusion: The Authority rules that (i) the applicant's bio-mining, site remediation and waste treatment operations are classifiable under SAC 9994 and attract 18% GST; (ii) the services provided to Tumakuru City Corporation, being pure services in relation to a municipal function of solid waste management, are exempt under Sl. No. 3 of Notification No. 12/2017; and (iii) the Authority will not rule on the SPV's status as a 'Governmental Authority' because that question is not properly within the advance-ruling provisions in the present case. 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.