GST Rate on supply of services to Solid Waste Management Garbage Collection, Disposal Water Supply, Cleaning of Colony

In re M/s Dhananjay Kumar Singh (GST AAR Chhattisgarh)

(i) Supply of Services of Colony maintenance work to C.G. Housing Board Colony, Sector 29, Naya Raipur with regard to solid waste management, water supply operation, garbage collection door to door and disposal, cleaning of colony i.e. garden .street and op area, drainage system, sewerage, water tank (All UG Sump Overhead Tank), cleaning of common area in multistoried building etc. and all other related work pertaining to operation and maintenance will be treated as exempt supply as per notification No 12/2017-State Tax (Rate) No. F-10-43/2017/CT/V(80), Naya Raipur, Dated 28.06.2017, Serial No. 3, Chapter 99.

(ii) The aforesaid exemption is not available in case any transfer of property in goods involved therein or if the said service is provided to persons other than State Government, Central Government or a local Authority or a Governmental Authority.

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,CHHATTISGARH

[U/s 98 of the Chhattisgarh Goods & Services Tax Act, 2017 (herein- after referred to as CGGST Act, 2017)]

The applicant M/s Dhananjay Kumar Singh HN 13, Sanyasi Para, Khamtarai Raipur, Chhattisgarh GSTIN 22AVZPS5945E1ZZ has filed the application U/s 97 of the Chhattisgarh Goods & Services Tax Act, 2017 seeking advance ruling as regards the applicable GST Rate on “supply of services to Solid waste management, Garbage Collection, Disposal, Water Supply, Cleaning of Colony” classified by the applicant as exempted supply as per Notification No. 12/2017 dated 28 June, 2017 as updated and amended time to time.

2. Facts of the case:-

I. M/S Dhananjay Kumar Singh H.N 13, Sanyasi Para, Khamtarai, Raipur (C.G.) is a service provider who is engaged in the business of executing service contracts and had been awarded a contract by the Chhattisgarh Housing Board (herein to referred as CGHB) for providing services in relation to Solid waste management, water supply operations, Garbage Collection door to door and disposal, Cleaning of colony i.e. garden, street, and open area, drainage system, sewerage cleaning of water tank (all UG Sump & Over head tank), cleaning of common area of residential area developed by Chhattisgarh Housing Board and not handed over to the local authority for its maintenance. The applicant is providing all those services to the CGHB that a local authority usually provides to the common resident under their jurisdiction. There are certain localities which are developed by CGHB for which maintenance work is given to contractor till they are handed over to the local authority.

II. The applicant sought Advance Ruling (AAR) on whether the services provided in relation to solid waste management, water supply operations, garbage collection door to door and disposal, cleaning of colony i.e. garden, street and open area, drainage system, sewerage cleaning of water tank (all UG Sump & Over head tank), cleaning of common area of residential area developed by Chhattisgarh Housing Board and not handed over to the local authority by Chhattisgarh Housing Board (CGHB) are exempt, under as per notification no. 12/2017 dated 28th June, 2017 as updated and amended time to time or not.

3. Contention of the Applicant:

I. Chhattisgarh Housing Board (CGHB) is a public sector undertaking of the Government of Chhattisgarh. It is a board constituted under Chhattisgarh Housing Board Act, 1972 (No. 3 of 1973). After formation of the State of Chhattisgarh in November 2000, Housing Board was one among the several Boards and Corporations liquidated by the Government. Later, however, the Government in 2004 revised its earlier decision and formed Chhattisgarh Housing Board vide Notification No. 177/3236/32/2003, dated 12/12/2004. Chhattisgarh Housing Board is the main arm of the Government of Chhattisgarh for giving effect to its Housing Board schemes and on implementing the Government’s schemes under social housing.

II. Since CGHB is a board constituted in terms of Chhattisgarh Housing Board Act which carries out functions entrusted by the State Government, the same would qualify as per the definition of “Government entity”.

III. Further CGHB is also engaged in performing various functions required to be performed by Municipality under article 243W of the Constitution like slum improvement, up gradation and also facilities like solid waste management, Water supply for domestic purpose etc. till the time the developed areas are officially handed over to the local authority for maintenance.

IV. The above view is supported by the recent judgment in case of M/s Vinod Kumar Panday, Raipur O/A No. BHO-EXUS-002APP-037-17-18 dated 03.05.2017 passed by Hon. Commissioner (Appeals) Raipur where the appellate authority held that the CGHB is covered under the definition of Government Authority for the purpose of Notification No. 25/2012 dated 20.06.2012.

V. The Definition of Government authority under service tax regime is also produced below as defined in Notification No. 25/2012 dated 20.06.2012 and as amended from time to time :-

” Governmental authority” means 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 Government,

with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;

VI. Applicant, engaged in the business of executing service contracts had been awarded a contract by the Chhattisgarh Housing Board (CGHB) for providing services in relation to Solid waste management, water supply operations, Garbage Collection door to door and disposal, cleaning of colony i.e. garden, street, and open area, drainage system, sewerage cleaning of water tank (all UG Sump & Overhead tank), cleaning of common area of residential area developed by Chhattisgarh Housing Board and not handed over to the local authority for its maintenance.

VII. The applicant’s contention is that residential area developed by Chhattisgarh Housing Board and not handed over to the local authority by Chhattisgarh Housing Board (CGHB) is exempt under as per notification no. 12/2017 dated 28th June 2017 as updated and amended time to time. However, in case they are not covered under the said exemption notification, the applicant has sought clarification as regards the applicable rate of GST for the above services rendered by them.

4. Personal Hearing:-

In keeping with the established principles of natural justice, personal hearing in the matter was extended to the authorized representative of the applicant and accordingly, Shri Ramandeep Singh Bhatia (CA) appeared before us for hearing on 30.10.2018 and reiterated their contention. They also furnished a written submission dated 30.10.2018, which has been taken on record.

I. The applicant has quoted the judgment of M/s The Nursery Men Cooperative Society, Lalbagh, Lalbagh Double Gate Road, Bengaluru, Karnataka in case no. KAR ADRG 18/2018, order dated 06-08-2018 as pronounced by Authority for Advance Ruling, Karnataka, wherein it was ordered that the services of maintenance of parks provided by the society to the State Government, Central Government or a Local Authority (including BBMP) or a Government Authority, not involving transfer of property in goods either as component of a works contract or a composite supply is covered under entry No. 3 of the Notification No. 12/2017 Central Tax (Rate) dated 28-6-2017 and hence exempt.

II. So the pure service contracts awarded by the Chhattisgarh Housing Board (CGHB) to them for providing services in relation to Solid waste management, water supply operations, Garbage Collection door to door and disposal, Cleaning of colony i.e. garden, street, and open area, drainage system, sewerage cleaning of water tank (all UG Sump & Over head tank), cleaning of common area of residential area developed by Chhattisgarh Housing Board comes under Indian Constitution’s Article 243W and Twelfth Schedule services in relation to a function of Municipality. Hence exempt under as per notification no. 12/2017 dated 28th June, 2017

5. The legal position, Analysis and Discussion.-

5.1 The provisions for implementing the CGST Act and CGGST Act, 2017 are similar. Now we sequentially discuss the provisions that are applicable in the present case.

Notification No. 12/2017-State Tax (Rate) No. F-10-43/2017/ CT/V(80), Naya Raipur, Dated 28.06.2017, Serial No. 3, Chapter 99 reads as under:-