No GST on Maintenance of Micro-Compost Centres & Processing Wet Waste from Chennai Corporation: AAR Rules Tax Exemption [Read Order]

The Tamil Nadu Authority for Advance Ruling (AAR) was recently met with a query whether the services of maintaining micro-compost centres and processing wet waste provided by the Greater Chennai Corporation qualify as “pure services” and are thus exempt from the levy of Goods and Services Tax (GST) as per Serial No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 and as amended from time to time.

The Applicant M/s Nellai Motors sought clarity on the classification of its service and its status to avail exemption from GST. The applicant had been awarded a contract by the Greater Chennai Corporation for a period of three years to maintain and process wet waste at micro-compost centres located in North Region Zones 1 to 5 of Chennai.

The contract, executed for a total value of ₹8,14,08,651 for three years was further extended for 150 days from 17.11.2023 onwards subject to a number of conditions - including that the Applicant processed 58.54 MT/day of waste at 13 designated locations and deploying required manpower while using infrastructure and utilities provided by the Chennai Corporation.

Advocate N. Murali, appearing for the applicant reiterated during the personal hearing held on 03.01.2025 that the applicant's role was limited to deploying labour for the waste processing operations and that no goods were involved in the supply.

The AAR Bench comprising Balakrishna S, (CGST Member) and B. Suseel Kumar, (SGST Member) examined the nature of the service rendered by the applicant and classified it under SAC 99943 - Waste Treatment and Disposal Services, specifically under Heading 9994 of Notification No. 11/2017-C.T. (Rate) since the activity involved treatment of wet waste and not collection.

The Bench further noted that the applicant satisfied the three conditions laid out under Serial No. 3 of Notification No. 12/2017-CT (Rate): that the service was a pure service; provided to a local authority (the Greater Chennai Corporation) and related to functions entrusted to municipalities under Article 243W of the Constitution, here being the service of solid waste management, as listed under Sl. No.6 in the Twelfth Schedule.

Accordingly, the AAR ruled that the services rendered by Nellai Motors to the Greater Chennai Corporation are eligible for full GST exemption

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