Waste treatment and disposal classification supports GST exemption for pure municipal solid waste management services.
Manpower-assisted maintenance of micro-compost centres and processing of municipal wet waste is treated as waste treatment and disposal rather than door-to-door waste collection, and is classifiable under Heading 9994, Group 99943. Because the supply is a pure service with no material goods component, and is provided to a local authority for a municipal solid waste management function, it satisfies the conditions for exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate), as amended. The resulting tax treatment is GST exemption for the service.
Issues: (i) Whether the service of maintaining micro-compost centres and processing wet waste is classifiable under Heading 9994 and, if so, whether it falls under Group 99943 as waste treatment and disposal services. (ii) Whether the said service supplied to Greater Chennai Corporation qualifies for exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate).
Issue (i): Whether the service of maintaining micro-compost centres and processing wet waste is classifiable under Heading 9994 and, if so, whether it falls under Group 99943 as waste treatment and disposal services.
Analysis: The activity involved deployment of manpower to maintain the micro-compost centres, process wet waste supplied by the municipal corporation, and hand over the manure by-product to the corporation. The service was not one of door-to-door collection of waste but of processing and treatment of wet waste. Under the scheme of classification for SAC 9994, the nature of the work corresponded more closely to waste treatment and disposal rather than waste collection.
Conclusion: The service is classifiable under Heading 9994, more specifically under Group 99943 as waste treatment and disposal services.
Issue (ii): Whether the said service supplied to Greater Chennai Corporation qualifies for exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate).
Analysis: The supply was found to be a pure service, with goods not forming part of the supply. Greater Chennai Corporation was treated as a local authority within the meaning of the GST law. The activity related to solid waste management, which is a municipal function under the Constitution. The service therefore satisfied the requirements of the exemption entry for pure services supplied to a local authority in relation to functions entrusted to a municipality.
Conclusion: The service is exempt from GST under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate), as amended.
Final Conclusion: The applicant's service was held to be a pure service relating to municipal solid waste management, classifiable under waste treatment and disposal services, and eligible for GST exemption.
Ratio Decidendi: A service consisting of manpower-assisted processing and treatment of municipal wet waste, supplied to a local authority for performance of a municipal function, is a pure service classifiable under waste treatment and disposal services and is exempt when it falls within the relevant exemption entry.
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