Operation And Maintenance Of Municipal Wet Waste Processing Facility Attracts 18% GST: West Bengal AAR

The West Bengal Authority of Advance Ruling (AAR) has ruled that the 18% GST is payable on the operation and maintenance of municipal wet waste processing facilities.The two-member bench of Varindra Kaur and Viraj Shyamkarn Tidke observed that the supply of services to be provided to the State Urban Development Agency for the design, build, finance, operation, and transfer of municipal wet waste processing facility based on composting and bio-methanation technology; setting up a semi-automatic material recovery facility for dry waste; and construction of a sanitary landfill along with operation and maintenance under Swachh Bharat Mission/Mission Nirmal Bangla is classifiable under SAC 9994 as "sewage and waste collection, treatment, disposal and other environmental protection services."The applicant submits that the State Urban Development Authority (SUDA) has accepted the offer to design, build, finance, operate, and transfer the municipal wet waste processing facility based on composting and/or bio-methanation technology; set up a semi-automatic material recovery facility for dry waste; and construct a sanitary landfill along with operation and maintenance for 10 years (renewable) under the Swachh Bharat Mission/Mission Nirmal Bangla. The SUDA has issued a "Letter of Acceptance and Work Order" to him to carry out the activities in respect of a number of municipalities in West Bengal.The applicant has sought an advance ruling on the issue of the classification of goods and services as per the work order and the applicable GST rate.The applicant submitted that in order to execute the work against the "Letter of Acceptance cum Work Order" issued by SUDA, the applicant entered into a tripartite agreement with the Director of SUDA and the Executive Officer of the respective municipality.The AAR held that the applicant has received work orders for a number of municipalities in West Bengal under the Swachh Bharat Mission/Mission Nirmal Bangla. The functions entrusted to a municipality under the Twelfth Schedule to Article 243W, inter alia, include public health, sanitation, conservancy and solid waste management. The supply involved is in relation to a function entrusted to a municipality under article 243W of the Constitution.The AAR held that the supply to SUDA could not be held as a supply to the government.The AAR found on the official website of the State Urban Development Agency that SUDA is a registered society which was formed in the year 1991 under the aegis of the erstwhile Municipal Affairs Department, Govt. of West Bengal, with the objective of ensuring effective implementation of different development programmes in urban areas of the state."SUDA, being a registered society, is not a Panchayat or a Municipality or any Board or Cantonment as specified in the above-referred definition of the local authority. Further, no documents have been produced before us wherefrom it can be established that SUDA is an authority who is legally entitled to and entrusted by the Government with the control or management of a local fund," the AAR noted.The AAR stated that SUDA cannot be held as a local authority as defined in clause (69) of section 2 of the GST Act and the supply involved has failed to qualify for exemption vide serial number 3 or 3A of the Exempt Notification.Applicant's Name: Simoco Telecommunications(South Asia) LimitedDate: 23/09/2022Click Here To Read Ruling

Operation And Maintenance Of Municipal Wet Waste Processing Facility Attracts 18% GST: West Bengal AAR

Mariya Paliwala

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