Drainage of Channels and Riverbeds is Exempted from GST: AAR [Read Order]

The West Bengal Authority for Advance Rulings (AAR) has held that the drainage of channels and riverbeds is an exempt supply under the Goods and Services Tax ( GST ) regime.

The Applicant got a contract for resectioning of river Jamuna from the upstream of Charghat Bridge to the downstream of Ghonja Haspur Bridge. They approached the AAR for determining their tax liability under the new tax regime.

The Applicant submitted that the recipient is the State Government. According to them, a price schedule that describes the work and its value. They argued that the work involves earthwork in excavation and re-excavation of the drainage channels and riverbed, and is pure service or a composite supply where the supply of goods is negligible. They further claimed that the work is an activity in relation to a function entrusted to a panchayat under Article 243G and / or a municipality under Article 243W.

The AAR noted that “the recipient is engaged in the development of irrigation and waterways, which includes activities in relation to the function listed under Sl No. 5 of the Eleventh Schedule, and, therefore, entrusted to a panchayat under Article 243G of the constitution of India. The recipient certifies that the work awarded to the Applicant, involving drainage of channels and riverbeds, is an activity undertaken in relation to the function referred to above.”