9911796707
TMI Blog2020 (12) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-Contractor, such intention is explicitly stated as available in entry 3(ix) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended. Thus, it is a well settled position that the exemption notification must be interpreted on their own wordings In the case at hand, the entry at Sl.No. 3 is explicit in its application in as much as the class of recipient and the type of activities are mentioned. On plain reading of the said entry, it is specified that only services provided to Central Government, State Government or union territory or local authority or a Governmental authority will be exempted, which is not the case in hand. Therefore the supply made by the applicant under the Service Agreement is not eligible for exemption in terms of entry No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. The supply of services by the applicant relating to waste collection, segregation, treatment, transportation and disposal services under the Service Agreements entered with both concessionaries are classified under SAC 9994 in terms of Notification No. 11/2017 C.T.-(Rate) dated 28.06.2017 - The activity undertaken by the applicant under the Service Agreements entered wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Road Sweeping, Business Support Staffing and other services relating to Integrated Facility Management to private sector entities as well as public sector entities and Governmental organizations. They have multistate presence in India in various States such as Maharashtra, Tamil Nadu, Andhra Pradesh, Gujarat, Karnataka, Chhattisgarh, Rajasthan and New Delhi. On 10th March 2020, they have entered into two separate Service Agreements for supply of waste collection, segregation, treatment, transportation and disposal services for the Greater Chennai Corporation with following entities: (i) Sumeet Urban Services (Chennai) II Private Limited, Chennai (ii) Sumeet Urban Services (Chennai) V Private Limited, Chennai The services referred above will commence effective April 2020. 2.2 The applicant has stated that The Greater Chennai Corporation established under the Chennai City Municipal Corporation Act, 1919 (hereinafter referred as the 'Authority) invited proposals in June 2019 for implementing 'Collection and Transportation of Solid Waste, Street Sweeping Waste including Street Sweeping activities, Horticulture Waste and Collection and Storage of Domestic Hazardous Waste' in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Concessionaires. The concessionaries are to operate and maintain the project and if required modify, repair, retrofit make improvements to the project and project facility with the approval from the authority. The monthly payments to concessionaries by the authority are based on the waste quantity handled and comprises of two components, fixed payment and performance-based payment on the basis of specified formula and key performance indicators prescribed. The other relevant clauses stated by the applicant are that the Concession Agreement is entered for a period of eight years. The Concessionaires are to obtain all permits as required under applicable laws and ensure compliance thereunder. Guideline for social safeguard prescribed. Specifications for Decentralised Procuring Units, Bio Metrication Units and Plastic Shredding Units prescribed. The Concessionaires are to set up an automated Management Information System (MIS) for effective monitoring of the project and are to set up 24x7 complaint redress system for handling complaints related to the project. The Concessionaires have to make arrangements for engagements of all staff, manpower and labour with appropriate qualification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. Whereas, Obligations and activities to be carried out by the Applicant are as under: ♦ Daily door to door / primary collection of waste ♦ Segregation of the collected waste as per the norms ♦ Support in transportation of solid waste ♦ Collection and support in transportation of solid waste from canal / river banks ♦ Collection and support in transportation of waste from Bulk Generation ♦ Collection and support in transportation of Horticulture and Garden waste from public places ♦ Street sweeping, collection and support in transportation of solid waste 2.5 The applicant has stated that they have to ensure sufficient number of sweepers, waste collectors, drivers for e-rickshaws, helpers for project vehicles and machinery with appropriate qualifications and experience, local or otherwise . They have to make their own arrangements for payment and extending facilities to the manpower /labour deployed on the project along with fulfilment of statutory compliance, obtaining license /permissions if any, registration under any laws and maintaining records, registers and documentation under the provisions of various Laws. Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pure Services. The Greater Chennai Corporation is covered as Specific entity i.e. Local Authority as per Section 2(69) of the CGST Act, 2017 and Services provided by them under the Service Agreements with Concessionaires in capacity of the sub-contractor are covered as 'Services provided to the Greater Chennai Corporation'. The applicant has stated that the waste collection and disposal service to be provided by them under Service Agreements with the Concessionaires is in fact provided to the Authority and not to the Concessionaires as they have been appointed as back to back Service Provider to carry out part of the work of waste collection, segregation, treatment, transportation and disposal services which is otherwise supposed to be performed by the Concessionaires under the Concession agreement; that where the main contractor/service provider, back to back, outsources the work to sub-contractor/sub-service provider, then the services of sub-contractor have to be treated as provided to the ultimate client and not to the main contractor; there are no two separate services provided, i.e., sub-contractor to main contractor and by the main contractor to the ultimate client.; the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion are exempted from the payment of GST in as much as the main contractor is exempt from GST. 2.9 The applicant has further stated that the services provided by them are by way of activities in relation to function entrusted to a Municipality under article 243 W of Constitution and the exemption is available for the same vide the following entry no.3 of Notification 12/2017 CT(R) dated 28.06.2017. "Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution". The applicant has opined that the phrase "in relation to" in the above entry are having a very wide connotation and all the activities including waste collection and disposal work subcontracted by main contractor to the sub-contractor, which is relatable to function entrusted to a municipality under article 243W of the Constitution will also get cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign/public authorities under the provisions of any law are statutory duties and therefore such activities assigned to and performed by a sovereign/public authority under the provision of any law, do not constitute taxable services. They have referred to CBEC Circulars 89/7/2006-S.T, dated 18th December 2006 and 96/7/2007 S.T dated 23/08/2007.They have also relied on the following decisions: • Selvel Media Services Private Limited Vs. Municipal Corporation of City of Ahmedabad [2016 (45) S.T.R. 166 (Guj.)] = 2010 (3) TMI 1011 - GUJARAT HIGH COURT • Dy. Commissioner of Police, Jodhpur Vs. Commissioner of C.Ex. & S.T., Jaipur-II [2017 (48) S.T.R. 275(Tri-Del.)] = 2016 (12) TMI 289 - CESTAT NEW DELHI • Instrumentation LTD Vs. Commissioner of C.Ex. & S.T., Lucknow [2016 (45) S.T.R. 182 (Tri-All)] = 2016 (7) TMI 502 - CESTAT ALLAHABAD • Commr of C.Ex, Nashik Vs. Maharashtra Industrial Development Corporation [2018 (9) G.S.T.L. 372 (Bom.)] = 2018 (2) TMI 1498 - BOMBAY HIGH COURT They have stated that the service provided by them relating to waste collection and disposal is basically sovereign function entrusted by the Constitution of India on Local Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreements and other documents have been furnished along with the application, the authority decided to extend another hearing only if any further information is required. 3.2 Further, the applicant vide their e-mail dated 14th October 2020 submitted that no additional submissions would be made by them in the matter. They stated that they have recently commenced their activities and requested to issue the ruling as early as possible. 4. The central jurisdictional authority reported that there are no pending proceedings in the applicant's case on the issues raised by the applicant in the ARA application in their jurisdiction. 5. The State Jurisdictional authority who has the administrative jurisdiction over the applicant has stated that the supply of pure services by the applicant are ultimately for the purpose of and provided to the Greater Chennai Corporation (i.e., the local authority).; As the activities of waste collection and disposal are in relation to function entrusted to a Municipality under article 243W of the Constitution of India, the same appears to be exempted from payment of GST in terms of entry No.3 of Notification No. 12/2017-C.T.(Rate) dated 28th June 2017 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aires, who have been awarded the bid to carry out the work of 'Collection & Transportation of Solid Waste, Street Sweeping Waste(including Street Sweeping activities), Horticulture Waste and Collection & Storage of Domestic Hazardous Waste to the Designated Processing Facility/Dump Site/Depositing Centers of Greater Chennai Corporation on DBFOT basis(Design, Build, Finance, Operate 86 Transfer)' in certain Zones of Greater Chennai Corporation(GCC). The Concessionaires have entered into Service Agreement for providing back to back part of services of waste collection, treatment and disposal services. The works entrusted to the applicant as per the Service Agreement are * Daily door to door / primary collection * Segregation of the collected waste as per the norms Support in transportation of Solid Waste * Collection and Support in transportation of solid waste from canal/river banks * Collection and support in transportation of waste from Bulk Generation * Collection and Support in transportation of Horticulture and Garden Waste from Public places * Street Sweeping, collection and support in transportation of solid waste Further, it is the responsibility of the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant is involved only in collection of various garbage, Segregation of the garbage, street sweeping and supporting in transportation of the solid waste for treatment/ disposal. The classification can further be confirmed by referring the 'Explanatory Notes to the Scheme of Classification of Service', which indicate the scope and coverage of the Scheme of classification of service and is a guiding tool for classification of services. The extracts of SAC 999423; 999424; 999431 and 999451 are as below: 999423 General waste collection services, residential This service code includes: i. general collection of waste, garbage, rubbish, refuse, trash, and commingled materials from residential locations, including curbside collection, back door collection, or automated collection on a flexible or regular schedule 999424 General waste coil ion services, other n.e.c. This service code includes: i. general collection of waste, garbage, rubbish, refuse, trash, and commingled materials from non- residential locations, on a regular or flexible schedule 999431 Waste preparation, consolidation and storage services This service code includes: i. consolidation, temporary storage, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * Use of phrase 'in relation to' in the exemption entry has made the meaning and scope wide and all incidental or ancillary and direct or indirect services are covered under exemption * Activities of Waste Management Services are already held as exempted * Sovereign functions of local authority are also exempt from GST * The "doctrine of Purposive interpretation" as adopted by Courts while interpreting exemption entries 9.2 Before going further, the entry based on which the exemption is claimed, entry no.3 of Notification 12/2017 CT(R) dated 28.06.2017 is examined as under: Sl.No. Chapter, Section or Heading Group or Service Code (Tariff) Description of Service Rate (per cent.) Condition 3 Chapter 99 Pure services (excluding work contract serviced or other composite supplies involving supply of any goods) provided to the Central Government, State Government or union territory- or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution NIL NIL On a cogent reading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the applicant under the Service Agreement. Hence, the applicant cannot be stated to have been appointed as back to back contractor. This is further established with the fact that the supply of the Concessionaires to GCC does not involve only 'Pure Services' in the DBFOT Schema of the project awarded whereas the supply envisaged by the applicant is "Pure Services". When the nature of supply made by the main contractor to the ultimate client and the sub-contractor to the main contractor is itself different, this claim of the applicant is baseless and out of context. The applicant has relied on rulings pronounced by GST Advance Ruling Authority of different States. Advance Ruling is applicable only to the person seeking the ruling and the jurisdictional officer and cannot be applied to any case. However, the applicability of the rulings relied upon are discussed as under: S.No. AAR reference Case details Remarks 1. 2019 (31) G.S.T.L. 321 (A.A.R-GST) In RE: V. K. Building Services Pvt. Ltd: Advance Ruling No. KAR ADRG 39/2019 dated 16.09.2019 = 2019 (10) TMI 523 - AUTHORITY FOR ADVANCE RULING, KARNATAKA Assessee, a Sub-contractor with main contractor provided Construction of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (19) G.S.T.L 349 (A.A.R-GST Uttarakhand) In RE: NHPC Limited Ruling No. 10/2018-19 dated 22.10.2018 = 2018 (11) TMI 1265 - AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND The case deals with entry 9(c) of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended and the ruling has held that all the conditions including the class of service providers and service receivers stipulated is fulfilled. Further, the Authority has referred to the GST recommendations on the rates specified on the Works Contract and its applicability to Main-Contractor /Sub-contractor The discussions and the ruling relates to Works Contract Services which is not the case at hand. In respect of WCS, there is a specific entry' under Notification No. 11/2017-C.T.(Rate) as amended when the works are undertaken in the capacity of sub-contractor. This has no relevance to the case at hand 6. 2019 (23) G.S.T.L. 249 (A.A.R-GST Uttarakhand) In RE : NHPC Ruling No. 17/2018-19 dated 30.01.2019 = 2019 (3) TMI 837 - AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND The question raised is whether the exemption available to the Main-contractor under WCS is applicable to Sub-contractor The Ruling in the said case is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and statutory function do not attract service tax. It is their contention that the Local authority has entrusted the functions relating to waste collection and disposal to the concessionary or even further to the sub-contractor and such an arrangement do not convert such sovereign function to non-sovereign function. As per the service agreement entered between the concessionaries and the applicant, the applicant has to carry out work of waste collection, segregation, treatment, transportation and disposal services, which is a part of the project entrusted to the Concessionaires by GCC. The scope of service provided may broadly be in relation to a function entrusted to the Municipality under Article 243W in as much as solid waste management is listed at Sr.6 in the Twelfth Schedule (Article 243 W) of the Constitution but what is to be seen according to us is whether all the limbs of the said entry of the exemption notification is fulfilled by the applicant. 9.9 The applicant has further stated that the "doctrine of purposive interpretation" has to be adopted in their case. They have relied on certain Apex court decisions. On a perusal of the decisions quoted, though it is emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted on their own wording. Wordings of some other notification are of no benefit in construing a particular notification" (emphasis added) Thus, it is a well settled position that the exemption notification must be interpreted on their own wordings. In the case at hand, the entry at Sl.No. 3 is explicit in its application in as much as the class of recipient and the type of activities are mentioned. On plain reading of the said entry, it is specified that only services provided to Central Government, State Government or union territory or local authority or a Governmental authority will be exempted, which is not the case in hand. Therefore we hold that the supply made by the applicant under the Service Agreement is not eligible for exemption in terms of entry No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 10. In view of the above, we rule as under: RULING 1. The supply of services by the applicant relating to waste collection, segregation, treatment, transportation and disposal services under the Service Agreements entered with both concessionaries are classified under SAC 9994 in terms of Notification No. 11/2017 C.T.-(Rate) dated 28.06.2017 2. The activity und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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