Public Health Engineering Directorate's digital services recognized as "pure services," attracting zero GST under Notification No. 12/2017
In a significant decision impacting the digital transformation of water supply management in West Bengal, the Authority for Advance Rulings (AAR) has ruled that services related to water supply management and digital transformation projects for the Public Health Engineering Directorate (PHED) of the Government of West Bengal are classifiable as "pure services." Consequently, these services attract nil Goods and Services Tax (GST) under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017.
The ruling was delivered on December 9, 2025, by members Shafeeq S and Jaydip Kumar Chakrabarti, in favor of the applicant, Rimita Mukherjee, represented by advocates Mr. Rajkumar Banerjee and Ms. Payel Agarwal. The advance ruling was sought to clarify the GST classification of various digital and consultancy services provided to the PHED, such as the digitalization and monitoring of water supply schemes, enhancement of digital tools, GIS mapping, data management, and consultancy services.
The AAR meticulously examined the nature of services provided, the contractual details, and the statutory provisions under the GST Act. It found that the services in question do not involve works contracts or the supply of goods, thereby qualifying as pure services exempt from GST. The ruling is aligned with the constitutional functions entrusted to Panchayats under Article 243G and Municipalities under Article 243W, which include the supply of drinking water.
This decision underscores the importance of digital integration in public utilities and supports the ongoing efforts under the Jal Jeevan Mission to ensure safe and reliable drinking water supply across rural West Bengal. By recognizing these services as essential and exempt from GST, the AAR facilitates smoother implementation of digital initiatives aimed at enhancing water supply management efficiency.
Bottom Line:
Goods and Services Tax - Services related to water supply management and digital transformation projects for the Public Health Engineering Directorate, Government of West Bengal, are classifiable as "pure services" under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, thereby attracting nil GST.
Statutory Provision(s):
- Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
- Goods and Services Tax Act, 2017
- Article 243G and Article 243W of the Constitution of India
The ruling sets a precedent for similar cases, encouraging digital transformation in public sector projects without the burden of GST, thereby promoting efficiency and accountability in essential services.
Rimita Mukherjee, (AAR)(West Bengal) : Law Finder Doc Id # 2825334
