Maintaining Micro-Compost Centres and Processing Wet Waste from Chennai Corporation Classified as 'Waste Treatment and Disposal Services': AAR [Read Order]

The Tamil Nadu Authority for Advance Ruling (AAR) recently clarified on the appropriate classification of services of maintaining micro-compost centres and processing of wet waste rendered by an applicant to the Greater Chennai Corporation.

M/s Nellai Motors, a GST-registered entity based in Chennai had been awarded a contract with a total value of ₹8,14,08,651 for a period of three years, subsequently extended by 150 days from 17.11.2023 to maintain the composting infrastructure provided by the Corporation, deploy manpower for the day-to-day operations and process up to 58.54 MT of wet waste per day at 13 specified locations.

The manure generated as a by-product from this process was required to be handed over to the Corporation without additional consideration. The services rendered by Nellai Motors were invoiced based on the tonnage of waste processed, with no GST being charged on the invoices raised.

Advocate N. Murali appeared for the applicant during the personal hearing and reiterated that the applicant’s role was limited to the deployment of labour, with all requisite infrastructure, utilities and raw material being supplied by the Greater Chennai Corporation itself.

It was submitted that the activity did not involve the supply of goods, and only amounted to processing and upkeep of the micro-compost centres.

The AAR Bench comprising Balakrishna S (CGST Member) and B. Suseel Kumar (SGST Member) referred to the Scheme of Classification of Services provided in the Annexure to Notification No. 11/2017-Central Tax (Rate) and observed that SAC 9994 dealt with “Sewage and waste collection, treatment and disposal and other environmental protection services”.

The Applicant’s initial contention was that the service rendered by them fell under SAC 99942 (Waste Collection Services); the Bench noted that Nellai Motors was not engaged in the door-to-door collection of waste, but in the treatment and processing of wet waste and the upkeep of composting infrastructure.

In light of the observations, the Bench concluded that the services rendered by Nellai Motors were more appropriately classifiable under Group 99943 – Waste Treatment and Disposal Services, within Heading 9994.

Accordingly, the AAR ruled that the activity of maintaining micro-compost centres and processing wet waste for the Greater Chennai Corporation is classifiable under SAC 99943 as per the Scheme of Classification under Notification No. 11/2017-Central Tax (Rate).

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