2021 (11) TMI 150 - AAR - GST

Exemption from GST - supply made to HMC - conservancy/solid waste management services as well as garbage collection and dumping services to the Conservancy Department - Eligibility under SI No 3 or 3A of the Exemption Notification - pure service or a composite supply - functions entrusted to a municipality under article 243W of the Constitution of India or not - HELD THAT - In the instant case, the work order issued to the applicant describes the nature of the work as lifting and removing of daily garbage etc. accumulated from the vats, dumping yards, containers and other places on the roads, lanes and bye-lanes of HMC area - the term pure services has not been defined under the Act. However, a bare reading of the description of services as specified in entry serial number 3 of the Exemption Notification denotes supply of services which does not involve any supply of goods can be regarded as pure services. It appears that in the instant case, the supplies do not involve any supply of goods. The applicant receives consideration only in respect of the quantity of the garbage lifted and removed. So, it may be inferred that the applicant's supply to HMC, which is a local authority as defined under section 2(69) of the GST Act, is a pure service. Whether the said services are in relation to any functions entrusted to a municipality under article 243W of the Constitution of India? - HELD THAT - It transpires from above that the functions entrusted to a municipality as listed in the Twelfth Schedule include the functions like sanitation conservancy and solid waste management. The applicant's services to HMC is exempt under entry serial number 3 of the Exemption Notification. Section 51(1) of the GST Act provides that the Government may mandate inter alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both. As the applicant is making an exempt supply to the HMC, the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply.

Summary

Issues Involved:
1. Whether the applicant's supply of conservancy/solid waste management services to the Howrah Municipal Corporation (HMC) is exempt from GST under Sl No. 3 or 3A of Notification No. 12/2017 - Central Tax (Rate).
2. Whether the provisions regarding Tax Deducted at Source (TDS) are applicable to the applicant's exempt supply.

Detailed Analysis:

1. Exemption from GST:
Applicant's Submission:
- The applicant provides pure services to HMC, a local authority, which should be exempt under Sl No. 3 of Notification No. 12/2017 - Central Tax (Rate).
- Sl No. 3 exempts pure services provided to the government or local authority in relation to functions entrusted to a Panchayat or Municipality under Articles 243G and 243W of the Constitution.
- Sl No. 3A extends this exemption to composite supplies where the value of goods does not exceed 25% of the total value.
- The applicant argues that since the services provided are pure services, they should be exempt from GST.

Revenue's Submission:
- The concerned officer agrees that the applicant's services qualify as pure services under Sl No. 3 of the Exemption Notification.
- The officer confirms that the services are provided to a local authority and are related to functions entrusted to a Municipality under Article 243W.

Authority's Findings:
- The authority confirms that the applicant's services involve lifting and removing garbage, which qualifies as pure services since no goods are supplied.
- These services are related to public health, sanitation, and solid waste management, functions entrusted to Municipalities under Article 243W.
- Therefore, the applicant's services are exempt from GST under Sl No. 3 of Notification No. 12/2017 - Central Tax (Rate).

2. Applicability of TDS Provisions:
Applicant's Submission:
- The applicant contends that TDS provisions under Section 51 of the GST Act apply only to taxable supplies.
- Since the supply to HMC is exempt, TDS provisions should not apply.

Revenue's Submission:
- The revenue officer concurs that TDS provisions are applicable only to taxable supplies.
- As the applicant's supply is exempt, the TDS provisions under Section 51 and the related notifications do not apply.

Authority's Findings:
- The authority agrees that Section 51 mandates TDS deduction for taxable supplies.
- Since the applicant's supply to HMC is exempt, the provisions of Section 51 and the TDS Notifications are not applicable.

Ruling:
- The applicant’s supply to the Howrah Municipal Corporation for lifting and removing daily garbage is exempt from GST under Sl No. 3 of Notification No. 12/2017 - Central Tax (Rate).
- As the supply is exempt, the provisions of Section 51 regarding TDS do not apply to the applicant's case.