Supply of Services for Removal of Hump by Dredging at Najafgarh Drain as awarded by Irrigation and Flood Control Department is exempt from GST: AAR [Read Order]

The West Bengal bench of the Authority for Advance Ruling ( AAR ) observed that supply of services for removal of hump by dredging at Najafgarh Drain as awarded by Irrigation and Flood Control Department is exempt from Goods and Service Tax ( GST ) 

The issue to be decided was whether the Government of Delhi – Irrigation and Flood Control Department comes under the purview of Union Territory.

The applicant submitted that the work being undertaken by him pursuant to the contract made with the Irrigation and Flood Control Department, which was a department of the Government of National Capital Territory of Delhi. The applicant further submits that the Tender Contract has been signed by the authorized signatories of “Irrigation and Flood Control Department, Government of NCT of Delhi” and that it also clearly states that the tender is for “execution of the work specified for the President of India”. The applicant contended that supply made to the Irrigation and Flood Control Department must imply supply made to the Government of Delhi, which is a Union Territory.

According to the applicant, the scope of work falls within the ambit of matter listed at Sl. No. 29 of Schedule Eleven of Article 243 G of the Constitution of India,  maintenance of community assets. Maintenance of a drainage system also constitutes maintenance of community assets.

The applicant further submitted that the scope of work was also in relation to matters listed at Sl. No. 6 of the Twelfth Schedule of 243 W of the Constitution of India, Public health sanitation conservancy and solid waste management. Any cleaning or desiltation activity carried out in the Najafgarh Drain constitutes Public Health, Sanitation Conservancy and Solid Waste Management.

The bench observed that the tender was related to the work for removal of hump (silt/ earth/ manure/ sludge etc.) by dredging from Khyala Bridge D/S RD (41980m) to Basaidarapur Bridge (RD 45350m) at Najafgarh Drain. The work of removal of silt/ earth/ manure/ sludge etc. is to be carried out from the bed of Najafgarh Drain in entire width of Najafgarh Drain including in or under foul condition up to desired level using suitable, adequate and latest technology machinery without obstructing the flow of drain. This also includes leveling and dressing of stacking area on the bank/ berm and construction of dykes within the reach if required for drying, disposal of excavated silt/ earth/ manure/ sludge etc. within the reach within a lead of 08 kms. The desilted/ excavated material was to be taken away by the agency for environmental safe disposal with all lead and lift.

The records submitted by the applicant also included a certificate dated 07.08.2023 under No. F.22(112)/2022-23/AB-CD-I/3890 issued by the Executive Engineer, Civil Division-I, Irrigation & Flood Control Department, Government of NCT of Delhi, New Delhi, wherein he has certified that “the works contract constitutes mainly of dredging and earthwork excavation which was pure service work and the cost of material transferred and consumed for execution and completion of the work contract is less than 5 (five) percent of the total work order value, if any required”. This clearly establishes that there was an element of goods also in the supply, although in a small percentage.

Therefore, the instant supply was found to be a composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply.

The two member bench of the tribunal comprising Dr. Tanisha Dutta (member) and Joy Jit Banik (member) observed that Supply of services being undertaken by the applicant for removal of hump (silt/ earth/ manure/ sludge etc.) by dredging at Najafgarh Drain as awarded by the Irrigation and Flood Control Department, Government of Delhi shall be covered under Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and therefore shall be exempted from payment of tax.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates