In re Arihant Dredging Developers Private Limited (GST AAR West Bangal)
The West Bengal Authority for Advance Ruling (AAR) has held that dredging services provided to the state government to improve the navigability of the Muriganga river for the annual Ganga Sagar Mela are exempt from the Goods and Services Tax (GST). The authority concluded that the activity qualifies as a “pure service” provided to a government entity in relation to functions entrusted to a Panchayat under the Constitution.
The ruling was issued in response to an application filed by Arihant Dredging Developers Private Limited, which was awarded a work order by the West Bengal government’s Irrigation & Waterways Directorate. The work involves dredging specific channels of the Muriganga river to ensure uninterrupted ferry service for millions of pilgrims travelling to Sagar Island for the Ganga Sagar Mela in 2025.
The Applicant’s Case and Questions
Arihant Dredging sought clarity on two primary questions: whether their service was covered by the GST exemption notification and, consequently, what the applicable tax rate would be.
The company contended that its service—involving the removal of silt and sediment from the riverbed and its disposal—is a “pure service” without any transfer of goods. It further argued that the service is provided to the State Government for an activity related to functions listed in the Eleventh Schedule of the Constitution under Article 243G, specifically pointing to entries concerning water management and waterways.
Authority’s Analysis Based on Three-Pronged Test
The AAR systematically analysed the query against the three conditions stipulated in Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which grants a NIL rate of GST. The authority first corrected the applicant’s inadvertent reference to an Integrated GST notification, clarifying that the Central GST notification is the relevant one for an intra-state supply.
