AAR Grants GST Exemption to PHED Digital Water-Supply Projects: All Services Classified as Pure Services

Rimita Mukherjee works closely with the Public Health Engineering Department (PHED) of the Government of West Bengal, handling a wide spectrum of digital and technical assignments. Her responsibilities cover the digitisation and monitoring of piped-water schemes, GIS layering, mobile- and web-application development, asset mapping, data management, and training sessions under the Jal Jeevan Mission (JJM). PHED manages more than 6,800 Piped Water Supply Schemes (PWSS).

With the State focusing heavily on digital systems for tracking Functional Household Tap Connections (FHTCs), PHED depends on continuous GIS updates, dashboards, and field-level data to keep its distribution networks functional. The applicant also placed before the AAR several proposed services such as UTWID generation, WhatsApp chatbot support, and GNSS-based surveys for on-ground mapping.

Issue Raised: Whether the digitisation, GIS-related work, application development, survey, documentation, and training services provided to PHED qualify as exempt “pure services” under Entry 3 of Notification 12/2017–CTR?

Authority’s Stand: The AAR reviewed each work order individually and observed that the applicant’s scope of work, whether building digital monitoring platforms, preparing GIS layers, enhancing Jalmitra, generating UTWID numbers, maintaining WhatsApp bots, conducting trainings, or validating datasets, involved nothing other than services. There was no supply of goods, no works-contract component, and no composite element that blended goods with services. The Authority also noted that the services were rendered directly to PHED, a full State Government department. Since all the tasks were tied to drinking-water supply, a subject expressly listed under Entry 11 of the Eleventh Schedule and Entry 5 of the Twelfth Schedule, the second statutory condition for exemption was clearly met.

The Authority underscored that drinking-water supply is a constitutionally assigned responsibility of Panchayats and Municipalities under Articles 243G and 243W. The applicant’s work was directly connected to this governmental function. As all three conditions under Entry 3 stood satisfied, the AAR concluded that the entire bundle of services is exempt from GST. Therefore, the Authority held that issues of classification or tax rate in the event of a negative finding simply did not arise.

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