GST Relief On These Activities Related To Water Quality Monitoring, Management Under Jal Jeevan Mission Contracts: AAR

The West Bengal Authority for Advance Ruling (AAR) has granted tax exemptions on several contracts awarded to Sunanda Environmental International Private Limited under the Jal Jeevan Mission (JJM), identifying most as either pure services or composite supplies eligible for beneficial tax treatment under the GST regime.

Sunanda Environmental, based in Kolkata, had approached the AAR seeking clarity on the applicability of GST on various service contracts secured from the Public Health Engineering Directorate (PHED), Government of West Bengal. These contracts were aimed at strengthening the state's water quality monitoring and drinking water delivery under the nationwide JJM.

Pure Services Recognized and Exempted

The AAR ruled that several contracts executed by Sunanda Environmental—such as operation and maintenance of secured water quality dashboards, upkeeping mobile applications for water quality, consultancy services for District Project Management Units, and operation of water testing laboratories—qualify as pure services. Since these services involve no supply of goods and are provided to a government entity for a function entrusted under Article 243G or 243W of the Constitution (such as drinking water supply), they are exempt from GST under Serial No. 3 of Notification No. 12/2017 – Central Tax (Rate), as amended.

Composite Supplies and Taxability

In contrast, contracts involving a mix of services and goods, such as maintenance of Mobile Laboratory Vans with consumables, upkeep and calibration of On-site Mobile Analysis Systems (OMAS), and distribution of water quality testing kits, were deemed composite supplies. Here, the AAR ruled that the tax rate would depend on the principal supplyinvolved. While most of these are service-led, one particular case—the supply of water testing kits—was considered goods-dominant.

Notably, the AAR clarified that these composite contracts do not qualify for tax exemption under Serial No. 3A of Notification No. 2/2018 since the value of goods involved exceeds the 25% threshold required for exemption under this clause.

Procurement of Mobile Lab Van Taxable as Goods

Interestingly, a specific procurement contract for a fully equipped Mobile Laboratory Van was ruled as a supply of goods—not a service. The vehicle, designed for field testing with preinstalled equipment, was classified under Entry No. 401A of Schedule III as a “special purpose motor vehicle” and will attract 18% GST (9% CGST + 9% SGST).

Ruling Details

Applicant’s Name: Sunanda Enviromental International Private Limited

Ruling Date: 8th May, 2025

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