The Hon’ble Patna High Court in the case of Mahavir Sharmik and Nirman Swalambi Sahakari Samiti Ltd. v. State of Bihar [CWJ No. 7635 of 2023 dated December 4, 2023] has set aside the Assessment Orders, thereby holding that, the solid waste management services undertaken on behalf of municipality would not fall within the purview of works contract service and is exempt from payment of GST vide Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017 (“the Exemption Notification”).
Facts:
Mahavir Sharmik and Nirman Swalambi Sahakari Samiti Ltd. (“the Petitioner”) is a cooperative society and has been given work by municipality for collection and disposal of waste material from each household, shop and commercial centre and sanitation work of drains. The Petitioner was issued Notice under Section 74 of the Central Goods and Services Act, 2017 (“the CGST Act”) based on deductions made by the Nagar Parishad under the Income Tax Act. Thereafter, the Assessment Order dated December 04, 2023 (“the Impugned Order”) was passed by the Revenue Department (“the Respondent”). Aggrieved by the Impugned Order, the Petitioner filed an appeal contending that, the Exemption Notification has granted exemption from payment of tax for supply to municipality under Article 243W of the Constitution. However, the Appeal filed by the Petitioner was dismissed by the Respondent vide order dated January 10, 2023 (“the Impugned Appellate Order”), thereby confirming the demand raised in the Impugned Order.
Aggrieved by the Impugned Appellate Order, the Petitioner filed a writ petition before the Hon’ble High Court contending that the Exemption Notification exempts the activity carried out by the Petitioner for levy of GST as removal of solid waste would not fall within the purview of GST.
Issue:
Whether Solid Waste Management Service undertaken for municipality would be exempted from GST?
Held:
The Hon’ble Patna High Court in CWJ No. 7635 of 2023 held as under:
- Opined that, the said services of solid waste management wherein the goods are not supplied would not be considered as works contract, therefore, the consideration received from the supply of aforesaid service would be exempt from levy of GST.
- Held that, the demand Notice and Impugned Order and Appellate Order are set aside
Relevant Extract of the Exemption Notification:
Sl. No. 3 of the Exemption Notification:
|
“Sl. No. |
Chapter, Section, Heading, Group or Service Code (Tariff)
|
Description of Services | Rate (per cent.) |
Condition |
|
3 |
Chapter 99 | 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 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. | Nil |
Nil” |
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