TMI Blog2020 (12) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... /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 with both concessionaries are not exempted from Goods and Services Tax in terms of entry no.3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port 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 following zones o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 qualifications and experience, lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Service charges/fees payable by the Concessionaires to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exemption at Sl.No. 3 to Notification No. 12/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempted 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and performed by the sovereign/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 Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their application which is in detail. As all the 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 Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant has entered into Service Agreements with the Concessionaires, 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 transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... storage services 640 999432 Hazardous waste treatment and disposal services 641 999433 Non-hazardous waste treatment and disposal services 642 Group 99944 Remediation services 643 999441 Site remediation and clean-up services 644 999442 Containment, control and monitoring services and other site remediation services 645 999443 Building remediation services 646 999449 Other remediation services nowhere else classified 647 Group 99945 Sanitation and similar services 648 999451 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity services of non-hazardous recyclable materials viii. recovery and preparation of non-hazardous recyclable materials, such as bailing, cleaning, sorting, volume reduction and similar preparation and consolidation of recyclable materials, for transportation to an appropriate facility that processes recyclable materials ix. consolidation, temporary storage and preparation of non-hazardous waste x. transfer facility services for non-hazardous waste xi. consolidation and preparation of non-hazardous waste for transportation to an appropriate facility that processes waste 999451 Sweeping and snow removal services This service code includes: i. street sweeping and cleaning services ii. gritting and salting of roads iii. snow ploughing and removal iv. runway sweeping and snow removal services v. runway vacuuming services From the above, it is evident that General collection of waste, garbage, refuse, etc from the residential and non-residential locations on a regular or flexible schedule is covered under 999423/999424 Consolidation, transportation of various waste are covered under 999431; Street Sweeping and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity; In relation to any function entrusted to ; A Panchayat under Article 243G of the Constitution or ; A Municipality under Article 243 W of the Constitution. Thus, the entry applies to Pure services provided to the defined clause of service recipients and the services are to be of any activity in relation to any function entrusted to a Panchayat/ Municipality under Article 243 G/243W of the Constitution. 9.3 In the case at hand, it is stated by the applicant that the supply made are the services covered under SAC 9994 and the concessionaires are responsible for the goods and consumables needed for the provision of such service. In Para 8 above, it is held by us that the supply of the applicant is covered under SAC 9994 and the applicant makes Supply of Pure Services 9.4 The Service Agreement is entered into by the Applicant with the Concessionaires who are registered Companies and do not belong to the class of Service receivers to whom, when such services are provided, the exemption under the said entry applies. It is the contention of the applicant that GCC is a Local Authority and services provided by them in the capacity of the sub-contractor ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -It is held the works of Main Contractor covered under 3(vi) of the Notification and that of Sub-contractor covered under entry 3(ix) which specifically covers the works done by Subcontractors for those works under 3(vi) of the Notification No. 11/2017 The Notification specifically states at entry 3(ix), that the works covered under 3(vi) if undertaken by sub-contractor stands covered under 3(ix). This has no relevance to the case at hand 2. 2019 (23) G.S.T.L. 473 (App.A.A.R-GST) In RE: Shree Construction. Order No. Mah/AAAR/SS-RJ/15/2018-19 dated 03.01.2019 = 2019 (3) TMI 1567 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA Assessee in the capacity of sub-contractor has undertaken works of works-contract for the works pertaining to Railways-covered under entry 3(v) of Notification No. 11/2017- C.T.(Rate) dated 28.06.2017 Entry at 3(v) referred do not specify the class of service provider to whom it applies. The entry is specific to the composite supply of works contract pertaining to railways including monorail and metro. This has no relevance to the case at hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 available and Finality not reached. Hence Not Applicable. 9.6 We further find that the applicant has stated that the services supplied by them are by way of activities in relation to function entrusted to a Municipality under Article 243 W of the Constitution and has claimed that the exemption is available for the functions. It is their claim that the word in relation to has a very wide connotation and all their activities are relatable to the functions entrusted to Municipality under Article 243 W. The word of the notification is to be read homogeneously. The entry states that the Pure Services provided to the said class of recipients by way of activity entrusted to Panchayat/ Municipality. The notification does not exempt just the services which are activities in relation to the functions entrusted to Municipalities but specifies t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 emphasized that an exemption notification should be construed directly, interpretation of the same would depend upon the nature and extent. 9.10 The applicant has further stated that where such services are sub-contracted on back to back basis, the purpose of the exemption would be truly followed and implemented only by allowing the said exemption to all service providers in a chain, whether main contractor or sub-contractor. This contention does not have merit in itself. In the connection, it might be logical to refer the observation of case of Karnataka Appellate Authority for Advance Ruling in the case of M/s Nurserymen Co-operative Society Limited wherein in similar facts the exemption under entry no 3 3A of the Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 is claimed The relevant observation is extracted below: 14 I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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