The West Bengal Authority of Advance Ruling (AAR) has held that no GST is payable on supplies made for rejuvenating Lamphelpat waterbody to alleviate urban flooding.
The bench of Dr Tanisha Dutta and Joyjit Banik has observed that supplies made by the applicant for rejuvenating Lamphelpat waterbody to alleviate urban flooding, providing sustainable water source for Imphal City and promoting ecotourism to the State Government of Manipur are exempted from payment of tax vide serial number 3A of the Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017.
The applicant provides work contract services to various State Governments, Central Government and Union Territories. The applicant has been awarded a work order by the Government of Manipur (Water Resources Department) for Development of Water Body/ Reservoir at Lamphelpat, Imphal West, Manipur, India. The applicant entered into a contract with the State Government of Manipur (Water Resources Department).
The purpose of the contract order is to dredge Lamphelpat Waterbody for enhancing the sustainable water potential for supply of water in the Imphal city, creating opportunities for development of new amenities, promoting eco-tourism and recreational facilities.
The works contract consists mainly of dredging and earthwork excavation which is purely construction and service work. The cost of construction material transferred or consumed for execution & completion of the work contract will be less than 5 percent of the total work order value as per the original contract agreement.
The applicant has sought the advance ruling on the issue whether supplies made by the applicant for rejuvenating Lamphelpat waterbody to alleviate urban flooding, providing sustainable water source for Imphal City and promoting ecotourism to the State Government of Manipur are exempted from payment of tax.
The AAR ruled that the work to alleviate urban flooding is not listed in the Eleventh and/or Twelfth Schedule supra. However, the functions entrusted to a Panchayat or to a municipality as listed in the Twelfth Schedule include the functions viz. (i) drinking water or water supply for domestic, industrial and commercial purposes and (ii) protection of the environment and promotion of ecological aspects.
The AAR held that the objective of the project includes improvement of water security and enhancement of the environmental situation which, according to us, is a subject matter of Twelfth Schedule [Article 243W of the Constitution (Seventy-Fourth Amendment) Act, 1992]. The supply made by the applicant to the Government of Manipur is in relation to a function entrusted to a Municipality under article 243W of the Constitution.
Applicant’s Name: Reach Dredging Limited
Date: 01/10/2024
