GST on Collection and Transportation of Cow Dung – Rajasthan AAR
Holds Service Taxable at 18%
Advance
Ruling No. RAJ/AAR/2026-27/01 Dated 11.06.2026
The Rajasthan Authority
for Advance Ruling (AAR) has ruled that the collection and transportation of
cow dung for a biogas plant is not eligible for GST exemption. The
Authority held that the activity is not merely transportation of goods,
but a mixed supply involving both collection and transportation of
organic waste. Accordingly, the service is taxable at 18% GST.
Background
M/s Hadoti Constructions
Company Joint Venture, Kota, was awarded a contract by the Kota
Development Authority (KDA) for collecting cow dung from gaushalas and
nearby villages and transporting it to a 150 TPD Biogas Plant
established at Devnarayan Yojna, Kota. The applicant approached the Rajasthan
AAR seeking clarification on the GST rate applicable to the services provided
under the contract.
Question
Before the Authority
Whether the collection
and transportation of cow dung supplied under the contract qualifies for
exemption under the existing GST notifications, or whether GST is payable on
such services?
Applicant's
Contentions
The applicant contended
that:
- Cow dung is organic manure,
and transportation of organic manure by a Goods Transport Agency (GTA) is
exempt under Notification No. 12/2017-Central Tax (Rate).
- Alternatively, transportation by road
(other than GTA services) is also exempt.
- Since the recipient was the Kota
Development Authority, a Government Authority, exemption should also be
available under other entries of Notification No. 12/2017.
- Collection is merely ancillary to the
transportation service and should not alter the taxability of the
principal supply.
Findings of
the Rajasthan AAR
The Authority rejected
the applicant's claim for exemption and observed that:
1. Applicant is Not a
Goods Transport Agency (GTA)
The applicant admitted
that it did not issue consignment notes, which is an essential
requirement for qualifying as a GTA. Therefore, the exemption available to GTA
services transporting organic manure was held to be inapplicable.
2. Service is Not Mere
Transportation
The work order required
the applicant to collect cow dung from multiple locations before
transporting it to the biogas plant.
Therefore, the Authority
held that the contract involved much more than transportation and could not be
treated as a simple road transport service eligible for exemption.
3. Activity is a Mixed
Supply
According to the
Authority, the contract comprised two distinct activities:
- Collection of waste
- Transportation of waste
Since these supplies were
provided together and did not qualify as a composite supply, the Authority
treated the transaction as a mixed supply under Section 2(74) read with
Section 8(b) of the CGST Act.
4. GST Rate
The Authority classified
the collection activity under Heading 9994 (Sewage and Waste Collection,
Treatment and Disposal Services).
As the highest GST rate
applicable to the mixed supply was 18%, the entire consideration became
taxable at 18% GST.
Ruling
The Rajasthan Authority
for Advance Ruling held that:
- The services provided under the
contract do not qualify for exemption under Notification No.
12/2017-Central Tax (Rate).
- The activity is a mixed supply
involving collection and transportation of waste.
- The applicable GST rate is 18%.
Conclusion
This ruling highlights
that the actual scope of work mentioned in the contract is crucial for
determining GST liability. Although cow dung may qualify as organic manure, the
Rajasthan AAR held that the applicant was engaged in a broader activity
involving the collection and transportation of waste, which did not
satisfy the conditions for exemption. Consequently, the entire contract was
held liable to GST at 18%.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
Click here
