Service tax on removal of Garbage to Tretment plant

[vasudevan unnikrishnan]

Work allotted by Municipal corporation is to transport the Solid waste and garbage from collection points to the treatment plant.Lorries,JCB etc are to be provided.The remuneration is paid as rent on per day for lorries and per hour for JCBs.The entire responsibility to provide vehicles from 6 am to 6pm,driver,fuel and safe transportation with fully covered sheets etc is on the contractor. Whether it can be construed as Supply of Tangible Goods and subjected to service tax.Period is both pre and post negative list era.

Thanks in advance for expert views.

unnikrishnan.v.

[KASTURI SETHI]

Sh.Vasudevan Unnikrishnan Ji,

Sir, My views for the period after 1.7.12 are as under:-

The activity of 'solid waste management' is exempted from ST vide Notification No.25/12-ST dated 20.6.12 (Serial No.25 (a)]. Further Board vide Circular No.334/15/2014-TRU dated 10.7.14 (Para no.2.2.2 (ii) has clarified as under:-

"(ii) Services ordinarily provided by a Municipality :

For greater clarity, the exemption in respect of services provided to Government or local authority or governmental authority [in entry at Sl. No. 25], has been made more specific. Services by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and up-gradation will continue to remain exempted but the exemption would not be extendable to other services such as consultancy, designing, etc., not directly connected with these specified services."

The activity of solid waste management cannot be carried out with out lorries and JCB machines. Thus the transportation of solid waste and garbage by these vehicles is directly linked to the activity of solid waste management. Hence remuneration received on account of above activities is exempted from Service Tax.

For the period prior to 1.7.12, the consideration received as rent on per day for lorries and per hour for JCBs etc. was taxable under the category of "Right to Use of Tangible Goods Services".

These are my interpretations of Service Tax Notification and circular. You may also invite the views of other experts to be doubly sure before final decision on the issue.

 

AI Summary

Solid Waste Transport to Treatment Plants Exempt from Service Tax Post-July 1, 2012; Taxable Before Under Tangible Goods Rule. A query was raised regarding the applicability of service tax on transporting solid waste and garbage to treatment plants, contracted by a municipal corporation. The contractor is responsible for providing vehicles, drivers, fuel, and ensuring safe transportation. The discussion highlighted that post-July 1, 2012, solid waste management activities are exempt from service tax as per specific notifications and clarifications. However, prior to this date, the remuneration for vehicle use was taxable under 'Right to Use of Tangible Goods Services.' The response suggests consulting additional experts for further confirmation.