The Patna High Court granted relief to Mahavir Sharmik and Nirman Swalambi Sahkari Samiti Limited a Cooperative Society and ruled that solid waste management activity exempt from Bihar Goods and Service Tax (BGST).
The petitioner challenged an assessment order dated 11.01.2021, as confirmed by the first Appellate Authority under the Bihar Goods and Services Tax Act, 2017 (“BGST Act”) vide orders; by a writ petition, especially since the Tribunal under the BGST Act has not yet been constituted and the petitioner is deprived of a consideration in the second appeal, as provided for in the statute.
As per the notification issued by the Government, pending constitution of the Tribunal there is a stay of recovery on payment of 20 per cent of the amounts disputed which remains to be paid, as per the assessment order. However, in the present case, the petitioner contends that the levy is not sustainable going by the specific notification which exempts the activity carried on by the petitioner; being removal of solid waste which is not a works contract and there is no supply of goods as would be required by the definition of ‘works contract’ under the BGST Act.
The petitioner filed an appeal specifically pointing out Notification No. 12/2017 issued by the Government of India granting exemption from payment at tax in relation to a function entrusted to a Municipality under Article 243W of the Constitution of India. It was argued that the invocation of jurisdiction under Section 74 was illegal, without authority and wholly improper. The appeal, however, was dismissed by series despite a similar appeal filed by another assessee having been allowed by the very same Appellate Authority.
The counsel for the petitioner, Shri D.V. Pathy took the Court through the notification issued by the Central Government, the specific work order issued to the petitioner by the Nagar Parishad, Jamalpur.
The Government Advocate Shri Raghwanand, however, pointed out that it is a works contract under which the tax was levied under the BGST Act. The contract awarded to the petitioner is produced which specifically indicates that for the eleven months, which is the subject of consideration, the petitioner has been given the work of collection and disposal of waste materials from each household, shop and commercial centres as also sanitation work of drainages/road in the specified seventeen wards of the Municipality. Other conditions under which the sanitation work is to be carried out, which includes management of solid waste are also specified in the work order.
A Division Bench of Chief Justice K. Vinod Chandran and Justice Partha Sarthy observed that “There is no supply of goods in the solid waste management disposal work awarded to the petitioner. In the above circumstances, the activity of the petitioner regulated by the work order produced and the consideration received for the same would be exempt from the BGST Act. It is also crystal clear that on similar circumstances, by Annexure-6 order, the Appellate Authority had allowed the appeal in the case of a different assessee, who had been carrying on the very same work of solid waste disposal in the very same Municipality.”
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