This case concerns an application filed before the Authority for Advance Rulings (AAR), Kerala, seeking clarity on the GST applicability on solid waste management services provided to a Government-controlled statutory entity. The applicant was engaged in activities such as collection, transportation, segregation, processing, and disposal of municipal solid waste—functions that are integral to public health and sanitation. The primary question raised was whether these services qualify as “pure services” supplied to a Governmental authority/Government entity, relating to functions entrusted to municipalities under Article 243G read with the Twelfth Schedule of the Constitution, thereby making them eligible for exemption under Entry 3 of Notification No. 12/2017–Central Tax (Rate). The AAR examined the nature of services, the status of the recipient entity, and the constitutional functions involved, ultimately determining the GST exemption status.
Background
- The applicant was engaged in solid waste management services, including:
- Collection of municipal waste
- Transportation
- Segregation
- Processing and disposal
- These services were provided to a Government-controlled entity established under a State Act to manage municipal functions such as sanitation, waste disposal, and public health.
- The applicant approached the AAR to clarify whether such services were exempt under GST in terms of:
- Entry 3 & 3A of Notification No. 12/2017–CT (Rate), relating to pure services or composite supplies provided to Government/local authorities in relation to functions entrusted under Article 243G.
Issues Before the AAR
- Whether solid waste management services provided to a Government-controlled statutory authority qualify as “pure services” for exemption.
- Whether the recipient qualifies as a Governmental authority / Government entity.
- Whether the services are in relation to the functions specified under Article 243G read with Twelfth Schedule, such as:
- Public health
- Sanitation
- Solid waste management
- Whether GST is payable on the service charges received.
Applicant’s Submissions
- The services are purely related to solid waste management, squarely covered under the Twelfth Schedule to the Constitution.
- The recipient authority is substantially funded and controlled by the State Government.
- The contract involves no transfer of goods, hence it qualifies as pure services.
- Therefore, the exemption under Notification 12/2017 should apply.
Findings of the AAR
- The authority examined the constitution and functioning of the recipient and concluded:
- It is a Government-controlled entity, performing statutory municipal functions.
- Solid waste collection, segregation, and disposal are clearly functions under Entry 6 of the Twelfth Schedule.
- The services involve no supply of goods, qualifying as pure services.
- The services are provided for public purposes, without any commercial element.
Ruling
- Solid waste management services provided by the applicant to the Government-controlled entity are exempt from GST under:
- Entry 3 of Notification No. 12/2017–CT (Rate) — Pure services supplied for functions under Article 243G.
✔ No GST is applicable on such service charges.
Conclusion
The Authority for Advance Rulings, Kerala, held that the solid waste management services provided by the applicant to the Government-controlled statutory entity squarely fall within the category of pure services relating to functions entrusted to municipalities under Article 243G of the Constitution. Since the recipient entity is established and fully controlled by the State Government for performing municipal obligations—including waste collection, sanitation, and public health—such services are covered under Entry 3 of Notification No. 12/2017–CT (Rate). Accordingly, the AAR concluded that the supply is exempt from GST, and no tax is payable on the service charges received for these waste management operations.