GST Exemption for Municipal Solid Waste Bio-Mining Services: AAR Tamil Nadu Rules in Favour of Gorantla Geosynthetics Ltd.
Background and Context
The Authority for Advance Ruling (AAR), Tamil Nadu, recently delivered a significant ruling in the matter of In re Gorantla Geosynthetics Ltd. (GST AAR Tamilnadu), addressing a set of questions that carry considerable practical relevance for entities engaged in solid waste management activities for municipal bodies across India.
The assessee, M/s. Gorantla Geosynthetics Ltd., is a Chennai-based company specialising in Municipal Solid Waste Management Solutions. The company was awarded a project under the Swachh Bharat Mission (Urban) 2.0 programme, specifically for the reclamation of an existing dump yard situated at a compost yard in Ariyalur Municipality, Tamil Nadu, through systematic removal and scientific processing of legacy waste.
Given the nature of the activity and its potential GST implications, the assessee sought clarity through the advance ruling mechanism on three specific questions — classification of its services, eligibility for exemption, and the status of the service recipient.
Nature of the Project and Scope of Work
The project entrusted to the assessee involved processing approximately 16,055 cubic meters of legacy waste accumulated over decades at the dump yard. The scope of work encompassed:
- Excavation of compacted mixed garbage using mechanical excavators and JCBs
- Screening and segregation of waste through trommel screens
- Shredding of recoverable fractions
- Scientific disposal of residual waste streams in accordance with the Solid Waste Management Rules, 2016 and CPCB Guidelines of 2019
The various output fractions generated during the bio-mining process were managed as follows:
- **Refuse Derived Fuel (RDF)😗* Transported to cement plants and other authorised co-processing facilities
- Compost and soil fractions: Tested in accredited laboratories prior to reuse or disposal
- Inerts and rejects: Disposed of through scientific landfilling or other approved methods
- Hazardous waste fractions (such as batteries, toxic containers): Handled separately in compliance with applicable regulations
The ultimate objective was to hand over the cleared and reclaimed site back to Ariyalur Municipality upon completion of all operations. The project was being executed on a Design, Build, Own and Operate (DBOO) basis by the assessee as the concessionaire.
Questions Raised Before the AAR
The assessee presented three questions before the Authority for Advance Ruling, Tamil Nadu:
- Q1: What is the correct classification of the services provided by the assessee?
- Q2: Are the services provided by the assessee exempt under Sl. No. 3 of Notification No. 12/2017 – Central Tax (Rate), dated 28.06.2017, as amended?
- Q3: Does M/s. Ariyalur Municipality qualify as a "Governmental Authority" as defined under Notification No. 12/2017 – CT, dated 28.06.2017?
The assessee also placed reliance on prior advance rulings — one in respect of M/s. Zigma Global Environ Solutions Private Limited (Order No. 35/AAR/2020, dated 21.10.2020) and another in the assessee's own case concerning services rendered to Tumkur Municipal Corporation (Order No. 114/AAR/2023, dated 17.11.2023) — both of which held similar services to be exempt.
Classification of Services: Heading 9994 Under GST
Identifying the Correct SAC Code
The AAR examined the nature of activities undertaken by the assessee and referred to the Scheme of Classification of Services set out as an Annexure to Notification No. 11/2017 – Central Tax (Rate), dated 28.06.2017.
The relevant classification framework under Heading 9994 is as follows: