Q. Classification of the services viz ‘Solid waste management – Revamping of existing dumped Garbage in compost yards by Bio -mining process’ provided by the applicant to M/s. Erode City Municipal Corporation, Erode?
A. Solid Waste Management-Revamping of Existing Dumped Garbage in Compost Yards by Bio-Mining process” provided by the applicant to M/s. Erode City Municipal Corporation, Erode is classifiable under SAC 9994 as per the Annexure to Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 for the reasons discussed in Para 7.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,TAMILNADU
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017.
2.1 The applicants have stated that the Commissioner, Erode City Municipal Corporation, had invited tenders for Solid Waste Management Request for Proposal for Revamping of Existing Dumped Garbage in Vendipalayam and Vairapalayam Compost Yards by Bio-Mining Process under implementation of the City Mission in Erode”. The applicant was declared and was awarded with the project. Accordingly, agreement was executed between the Applicant and the Commissioner Erode City Municipal Corporation vide agreement dated 19/01/2019. As per the Request for Proposal document (the “RFP”), the Erode City Corporation intends to remove the legacy waste (approximately 560000 CUBIC METER) dumped at the Erode dump yard through bio-mining process on Design, Build, Own and Operate (DBOO)concept. (here in after referred as Project). Thus, as per the above they, have to remove the legacy waste (approximately 560000 CUBIC METER) dumped at the Vendipalayam and Vairapalayam dump yard by bio-mining process. The Processing plant/ legacy waste removal plant are to be operated and maintained by them by fulfilling all the statutory provisions and the cost of built design, installation, operation, maintenance in this plant are to be solely borne by them. The Scope of the project as per the work plan includes excavating the existing mixed compacted garbage which underwent biological degradation in the land portion allocated/earmarked by Erode City Municipal corporation and sieving them by Mechanical sieving machine or any other equipment at their cost; Control Odour; Eco friendly and non-polluting process in order to reduce the impact of Dumping site in the adjacent areas; Segregate the excavated garbage in the land portion earmarked; Selling, diverting for recycling, marketing and recycling the excavated materials; Creation and maintenance of infrastructure, facilities and amenities; Leveling the earth surface by bull-dozer or any other earth moving equipment; Deployment of necessary manpower, materials, equipment’s, tools and construction of plants and shed sand creation of facilities for handling, separating, segregating and storing; providing security arrangement for the plan project site, machineries, equipment etc; Thus they have to remove the legacy waste dumped by bio-mining process on putting up the processing plant/legacy waste removal plant under Design, Build, Own and Operate(DB00). For the work executed the Erode City submitted that the services provided by them to M/s Erode City Municipal Corporation is exempted from payment of GST as per SI.No. 3 of Notification No: 12/2017 Central Tax (Rate) dated 28-7-2017 as amended.
2.4 With reference to deduction of TDS as per the provisions of Section 51 of CGST Act and TNSGST Act, 2017 for the services rendered as stated in the Application, it is submitted that the persons specified under Section 51(1) as per Notification No. 50/2017-Central Tax dated 13/09/2018 has to deduct tax at source on taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees. In the instant case, M/s Erode City Municipal Corporation falls within the above notification as specified persons. However, as stated in the preceding submissions, the services rendered by them is exempted from payment of GST as per Si. No. 3 of Notification No: 12/2017 Central Rate dated 28/06/2017. Hence no amount needs to be deducted as per the provisions of Section 51 of Act, ibid.
3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the appellant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media vide e-mail. The applicant consented and the hearing for admission of the application was held on 20.08.2020. S/Shri. Nagesh Prabhu, Director of the applicant company and B.Venkateswaran, Authorized Representative for applicants participated in the virtual personal hearing. They furnished a written submission which was taken on record. The authorized representative reiterated the submissions made along with the application and that furnished for the hearing shared in mail. It was intimated that of the three questions for which ruling is sought, the Question No.3, is not admissible as the applicant is not raising the question on their behalf and the applicant acceded to it. The applicant was asked to furnish the Invoices raised on Erode Municipal Corporation. They were also asked to furnish a Write-up on the activities undertaken as per the agreement entered into with EMC cross referencing the Tender/Agreement to establish whether the activity is one of ‘Reclamation of Land’ or ‘Solid Waste Management’ along with specific category the activity fall under Annexure to Article 243 W. The applicants were informed that on receipt of submissions, if needed, another hearing would be extended, if necessary.
3.4 With reference to question no. 3 raised by them, during the Virtual Hearing it was informed that the issue raised therein, was outside the purview of Advance ruling and they had agreed to drop it, however, they requested to reconsider the issue for the following reasons:
> The Advance Ruling authority is governed by the provisions of Chapter XVII of CGST ACT 8s the relevant Sections 95 to 98, 102, 103, 104 and 105. As per Section 95, the term ‘advance ruling’ means a decision provided by this authority to the applicant on matters or questions specified in Section 97(2), in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
> As per Section 97, the question on which the advance ruling is sought under this Act, shall be in respect of, —
> In their case, they are the supplier of service and the ruling requested is wrt to the applicability of Notification No. 50/2018 — Central Tax dated 13/09/2018 with reference to the supply of their service. So, they have fulfilled the requirements for advance ruling as per the provisions of Section 97of CGST Act, 2017. Hence it is respectfully request to consider our plea.
> They have referred to the decision of AAR in the case of
Therefore they requested the AAR to consider the above and extend ruling for this question also.
4. The applicant is under the administrative jurisdiction of Center. The jurisdictional authority submitted that there are no pending proceedings in the view that the services rendered by them fall under SAC Code No: 9994 “Sewage and Waste collection, treatment and disposal and other environmental protection services” and in particular Group 99943-Waste treatment and disposal services” as per Annexure to Notification No: 11/2017 Central Tax (Rate) dated 28/06/2017.
7.2 We find that the agreement is entered into by the applicant with the Erode City Municipal Corporation for disposal of 5,60,000 cubic meter of existing waste dumped in the dumpsite by setting up processing facilities to dispose off the dumped waste through scientific processing in accordance with Solid Waste Management Rules 2016. From the submissions, it is seen that following steps are taken:-
(1) Pre-Stabilization- the entire landfill site is converted into equal sized windrows and turned frequently along with spraying of bio-culture and de-odouriser;
(2) Sorting 86 Segregation – the system separates the excavated landfill waste into soil, stones and combustibles with utmost accuracy;
(3) Disposal – the non-combustible fractions and combustible fractions are disposed
The applicant sets up the facility after obtaining all requisite clearances and approvals for establishing the same, process the dumps, recover materials/ aggregates and dispose all aggregates on their own account as per SWM Rules 2016. The applicant has to recover the land of all the wastes and hand over to the Erode Municipality Corporation and the period of agreement is 24 months. The dumpsite is handed over to the applicant by the corporation as per Para 10 of the agreement with the right to use the site for the agreed purpose, i.e., disposal of the dumped MSW. The applicant is compensated based on the tonnage of waste disposed. The applicant raise invoice based on the weight/volume of the waste cleared from the landfill. They have furnished copies of Invoice raised by them on Erode City Municipal Corporation. On perusal of Invoice No. VAP\ 19-20 \ 0042 dated 31-Mar-20, it is seen that the invoice is raised for the Quantity handled and is stated `GST “NIL” as per Notification No. 12/2017-Central Tax(Rate) dated 28.06.2019 under Chapter 99′. Thus, the applicant undertakes processing of waste and disposal of the same and the reclaimed land free of the dumped waste is returned to the Corporation. In other words, the activity undertaken is treatment 13s disposal of waste dumped at the yard as per the SWM Rules 2016 and reclaiming of the land
vi. consolidation, temporary storage and preparation of non-hazardous recyclable materials
vii. transfer facility 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
999432 Hazardous waste treatment and disposal services
This service code includes:
i. treatment to reduce, eliminate, or transform hazardous waste
ii. Note: Processes include biological, chemical, andjor physical procedures or incineration. These procedures may lead to a disposable residual or result in the recovery of a recyclable material.
iii. disposal services for hazardous waste at a facility that meets legal standards for the disposal of hazardous waste, such as at approved controlled containment facilities or landfills
999433 Non-hazardous waste treatment and disposal services
This service code includes:
i. disposal of non-hazardous waste on or in a sanitary landfill which meets the sanitary landfill criteria specified by legislation or regulation, i.e. designed to prevent leaking etc.
ii. disposal of non-hazardous waste on or in landfills other than a sanitary one
iii. incineration of non-hazardous waste in a facility that meets legal standard and requirements for incineration of non-hazardous waste
iv. other non-hazardous waste disposal services, such as:
a. services of chemical or biological reduction of agricultural waste and similar treatment services
It is seen that the activities undertaken by the applicant such as consolidation of waste, temporary storage of hazardous 85 non-hazardous waste; treating and disposing the waste by processing in a facility that meets legal standards, are all covered under the group 99943. The ultimate goal of the activity is reclamation of land clear of the dump and the activity undertaken by the applicant is removal of the waste following the norms set under SWM Rules 2016. Therefore, we hold that
the activity undertaken by the applicant is covered under SAC 9994 and more appropriately under the Group 99943.
8.1 The Second question for which the ruling is sought is whether the services provided by the applicant are exempted under Sl. No. 3 of notifications No. 12/2017 dt: 28.06.2017 as amended. The relevant entry is examined as under:
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
Clause (e) of article 243P of the Constitution defines “Municipality”, which reads as (e) “Municipality” means an institution of self-government constituted under article 243Q;
Article 243Q speaks about the constitution of Municipalities and as per clause (c) of Article 243Q, Municipal Corporation is also considered as Municipality. Article 243Q reads as below:
243Q. Constitution of Municipalities. — (1) There shall be constituted in every State, —
(a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area;
(b) a Municipal Council for a smaller urban area; and
(c) a Municipal Corporation for a larger urban area, in accordance with the provisions of this Part:
The Erode City Municipal Corporation was formed as per the Erode City Municipal Corporation Act 2008 by the Government of Tamil Nadu. The service recipient ie., Erode City Municipal Corporation, Erode, Tamil Nadu is a local authority. As per Section 2 clause (69) subclause (b) of the CGST Act, 2017 ‘Municipality’ as defined in clause (e) of article 243 P the Constitution is a local authority, hence the services are provided to ‘Local Authority’ and the criterion related to recipient is satisfied.
8.2.3 The next criterion to be verified is whether the activity is a function entrusted to a municipality under Article 243W of the Constitution. Sl.No.6 of The Twelfth Schedule to the Constitution under Article 243 W is as follows:
“6. Public health, sanitation conservancy and solid waste management.”
Further, as per the Solid Waste Management Rules 2016, the Duties of Local Authorities is given under Rule 15 of the said rules and it is stated that:
15. Duties and responsibilities of local authorities and village Panchayats of census towns and urban agglomerations.- The local authorities and Pancltayats shall,_
(a) prepare a solid waste management plan as per state policy and strategy on solid waste management within six months from the date of notification of state policy and strategy and submit a copy to respective departments of State Government or Union territory Administration or agency authorised by the State Government or ()Mon territory Administration:
Whether the Erode city Municipal Corporation is liable to deduct TDS as per the provisions of section 51 of CGST Act of TNGST Act, 2017 for the services rendered as state in the application?
It is agreeable that the applicant supplies the service but the question raised is not on the applicability of the Notification to the applicant but the applicability of the Notification to the recipient of the services of the applicant, who is a distinct person for whom this ruling is not applicable as per Section 103 of the Act. For ease of reference, Section 103 of the Act is given below:
103. Applicability of advance ruling.— (1) The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only— (a) on the applicant who had sought it in respect of any matter referred to in subsection (2) of section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant.
Therefore, we do not find any merit in the claim of the applicant in as much as the ruling, if extended also, is not applicable in respect of ‘Erode City Municipal Corporation’ who is not the applicant.
9.3 On the relied upon rulings of the AAR, West Bengal, again it is reiterated that Advance Ruling is applicable only to the applicant and the jurisdictional/concerned officer in respect of the applicant. However, on perusal of the relied upon rulings, it is seen that the questions raised is on the eligibility of the applicants to the exemptions at S1.No. 3/3A of Notification No. 12/2017 dated 28.06.2017 and if exempted whether the notifications regarding TDS are applicable to the supply and the authority has ruled the applicability to that supply, whereas the question before us is on the liability of the recipient of the services who is not the applicant in the case at hand. Therefore, we hold that this question is not admissible as per Section 97 read with Section 95 of the Act and therefore not admitted.
10. In view of the above discussions, We rule as under:
1. Solid Waste Management-Revamping of Existing Dumped Garbage in Compost Yards by Bio-Mining process” provided by the applicant to M/s. Erode City Municipal Corporation, Erode is classifiable under SAC 9994 as per the Annexure to Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 for the reasons discussed in Para 7 above.
2. The afore said service provided by the applicant is exempted under Sl.No. 3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended
3. Not applicable for admission under Section 97 of the Act for the reasons ed under Para 9 above