GST exemption for local authority supplies does not cover standalone machinery goods; 18% tax applies.

The exemption for supplies to a local authority in relation to municipal functions applies only to pure services or to a composite supply in which the value of goods does not exceed 25% of the total supply. A standalone supply of machinery and other goods for a fresh waste processing plant does not meet that condition, so it is taxable under GST. The goods were classified as machinery under Chapter 84, including HSN 8479, 8428, 8462 and 8474, and the applicable GST rate was determined at 18%.

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Issues: (i) Whether supply of goods to Anand Municipality Corporation for fresh waste processing is exempt from GST under Notification No. 12/2017-CT(R) dated 28.06.2017. (ii) If GST is payable, what is the applicable rate on the goods supplied.

Issue (i): Whether supply of goods to Anand Municipality Corporation for fresh waste processing is exempt from GST under Notification No. 12/2017-CT(R) dated 28.06.2017.

Analysis: The exemption under Serial No. 3 applies only to pure services provided to a Governmental or local authority in relation to functions entrusted under Article 243G or Article 243W of the Constitution of India. Serial No. 3A applies only to composite supplies of goods and services where the value of goods does not exceed 25 per cent of the composite supply. The supply in question was found to be a supply of machinery and other goods for a fresh waste processing plant, and not a pure service or a qualifying composite supply.

Conclusion: The supply is not exempt and is liable to GST.

Issue (ii): If GST is payable, what is the applicable rate on the goods supplied.

Analysis: The goods supplied were treated as machinery falling under Chapter 84, particularly HSN 8479, 8428, 8462 and 8474. On that basis, the applicable GST rate for the goods covered by the invoices was determined.

Conclusion: The applicable rate of GST is 18%.

Final Conclusion: The supply of machinery to the local authority is taxable, and the goods attract GST at the rate of 18%.

Ratio Decidendi: Exemption for local authority-related municipal functions applies only to pure services or to a composite supply satisfying the specified goods-value threshold, and a standalone supply of goods does not qualify.

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