TMI Blog2021 (1) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... y or local authority or a Governmental Authority or a Government Entity 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. Hence, three conditions are required to be satisfied for a service to be covered under subject entry of the notification which is as below: (1) It must be pure service not involving any supply of goods. (2) It must be provided to the Central Government or State Government or Union Territory or Local Authority or a Governmental Authority or a Government Entity. (3) It must be an activity in relation to any function entrusted to a (i) Panchayat under Article 243G of the Constitution; or (ii) Municipality under Article 243W of the Constitution. On going through the work order/agreement of the applicant with Notified Area Authority, Vapi, we find that it is for the purpose of collection, sorting and recovery of waste and setting up of Material Recovery Facility under DBFOOM model as per Rules, Norms and Regulations of SWM Rules-2016, PWM Rules-2016, MoEFCC, CPCB, GPCB etc. at Notified Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Weights Measures Rules, 2016, Plastics Waste Management Rules, 2016, The Ministry of Environment, Forest and Climate Change (MoEFCC), Central Pollution Control Board, Gujarat Pollution Control Board etc. at Notified Area, GIDC, Vapi. The applicant has submitted a copy of the said tender. 2. The applicant has submitted that they participated in the bidding process for the said tender for providing the said services to Notified Area Authority, Vapi for 05 years. The Applicant was granted this tender vide letter dated 22.01.2019 for providing the said services to Notified Area Authority, Vapi for an amount of ₹ 1,71,10,000/- for a period of 05 years(copy submitted); that consequently an agreement was entered into between the applicant and Notified Area Authority, Vapi on 04.02.2019 and under this agreement, the applicant has to provide services for collection, sorting, recovery of solid waste and establish/set up Material Recovery facility for sustainable waste management in Vapi Notified Area on DBFOOM (Design, Build, Finance, Own, Operate Maintain) model for five years; that the applicant has to provide door to door collection of waste in Notified Area Authority, Vap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 on the following grounds: (i) The applicant is eligible for the exemption provided under Sr.No.3 of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 which reads as 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 or a Government entity 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. (ii) The applicant have submitted that they satisfy all the 3 conditions of the said exemption notification as under: 1. The waste management services include door to door collection of garbage/waste, sorting and recovery of waste which is pure service as there is no supply of goods involved in this activity, that setting up of material recovery facility and Food Compost Facility operation and maintenance does not involve any transfer in goods and these are not the activities for which consideration is given by Notified Area Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority, Vapi is a wing of municipal corporation which is basically a local body established by the State Government to function as a SelfGovernment under Part-IX of the Constitution of India and that Notified Area Authority, Vapi like any other local body provides municipal service in the industrial area of GIDC, Vapi like infrastructure development, improvement of roads, Fire safety services, water supply, street lighting, night patrolling, cleaning services, door to door garbage collection, public health measures, Birth and Death registration and such other services. Therefore it is a Local Authority in terms of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. The applicant further states that even if Notified Area Authority, Vapi is not considered as Local Authority, it is Governmental Authority as defined vide Notification No.32/2017-Central Tax(Rate) dated 13.10.2017 which reads as: An authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90 per cent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have stated that NAA, Vapi to whom the applicant has provided services is a body constituted under the State Legislature and therefore, it is Local Authority and/or Government Authority as defined under Notification No.12/2017-CT(Rate) dated 28.06.2017. The applicant has relied upon the following judgements and forwarded copies of the same: i. The Income tax Officer, Surat v/s. Sachin Notified Area, ITA No.1315/ahd/2007, Income Tax Appellate Tribunal, Ahmedabad. In this case, the assessee is a notified area in Surat for the Industrial development. The assessee claimed that it is a local authority notified by the State Government under the Gujarat Industrial Development Act, 1962,(GIDA). Therefore, it filed its income tax return NIL claiming exemption under section 10(20) of the Income Tax. However, the assessing officer was of the view that the assessee is not a local authority and it is not a Municipality as defined under section 10(20) of the Act. The Honorable Tribunal has held that the State Government can create by Notification in official gazette, a notified area and provisions of Gujarat Municipalities Act would be applicable to such notified areas under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State of Gujarat under Section 16 of the Gujarat Industrial Development Act, 1962, it is clear that the Notified Area Authority, Vapi (NAA, Vapi)to whom services are provided is a local authority. The applicant has submitted copies of: (i) Extract of Section 16 of the Gujarat Industrial Development Act, 1962 (ii) Extract of the Gujarat Industrial Development (Notified Area) Rules, 2007 notified under GHU-8/2008-GID: 102004: 1496: G: issued in exercise of powers conferred by Section 53 read with Sections 16 and 16A of the Gujarat Industrial Development Act, 1962. 8. The applicant has further submitted that without prejudice to the above submissions, if it is not considered a local authority, it has to be considered as Governmental Authority because NAA, Vapi is set up by an Act of State Legislature i.e. Gujarat Industrial Development Act; that in case NAA, Vapi is considered as a Governmental Authority, the condition of 90% or more participation by way of equity or control to carry out any function entrusted to a Panchayat under Article 243G of the Constitution, as prescribed in Notification No.12/2017-CT(Rate)(supra), shall be applicable only to sub-clause(ii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2017 which contains the Chapter, Section and Heading of classification of services alongwith their GST rates. On going through the said notification, we find that the solid waste management services provided by the applicant are classifiable under Heading 9994 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 on which GST liability is 18%(9% SGST + 9% CGST) and reads as under: Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 32. Heading 9994 Sewage and waste collection, treatment and disposal and other environmental protection services. 9 -- 12. Thereafter, we are required to refer to Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended by Notification No.02/2018-Central Tax(Rate) dated 25.01.2018) referred to by the applicant which contains a list of exempte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces under Schedule II of CGST Act or which are not covered under the definition of goods shall be categorized as pure services. However, as per the notification, works contract services or other composite supplies involving supply of any goods are not covered in entry no.3 of aforementioned notification. In other words, if a person provides only service to any person without involvement of supply of goods along with supply of services, then the same would be termed as supply of pure service. On going through the work order/agreement of the applicant with Notified Area Authority, Vapi, we find that it is for the purpose of collection, sorting and recovery of waste and setting up of Material Recovery Facility under DBFOOM model as per Rules, Norms and Regulations of SWM Rules-2016, PWM Rules-2016, MoEFCC, CPCB, GPCB etc. at Notified Area, GIDC, Vapi. However, while going through the Scope of Work of the agreement, we find that there are certain clauses under the portion Detailed Specification and terms and conditions of the agreement which raise a question mark over the contention of the applicant that they are supplying/providing pure services. The same are as under: (a) Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude GST. This clause itself nullifies the contention of the applicant that they are providing pure services to Notified Area Authority, Vapi which they claim, are exempt from GST by virtue of Sr.No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. In view of the above, we conclude that the services provided by the applicant to Notified Area Authority, Vapi are not Pure Services. 13. Since the applicant have failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 14. In view of the above and in light of the facts discussed in the earlier paras, we come to the conclusion that the exemption under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 is not available to the applicant. 15. In light of the foregoing, we rule, as under R U L I N G Question : Whether the solid waste management service provided by the applicant to Notified Area Authority, Vapi under the above referred agreement is exempted under Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? Answer : The solid waste management service provided by the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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