Even if supplies are made under a government scheme, these may not be exempt from Goods and Services Tax (GST) if these are not directly supplied to governments or local authorities.

Work done for State Urban Development Agency (SUDA) under the Swachh Bharat Mission (SBM) and Mission Nirmal Bangla would not be exempt from GST, according to the state Authority for Advance Rulings (AAR).

The work will attract 18 per cent GST, broken into 9 per cent each for central and state GSTs, it ruled.

The case pertains to a contract received by Simoco Telecommunications (South Asia) Ltd from SUDA for sewage and waste collection treatment and disposal and other environmental protection services in a number of municipalities in West Bengal.

AAR held that while pure supplies to governments and local authorities are exempt from GST, composite supplies are also exempt if goods are up to 25 per cent of the total supply.

However, the company failed to produce a document to prove this criterion.

Leaving that aside, the AAR examined whether supply to SUDA constituted supply to governments or local authorities.

AAR observed that SUDA is a registered society that was formed in the year 1991 under the aegis of the erstwhile Municipal Affairs Department, West Bengal, with the objective to ensure the effective implementation of different development programmes in urban areas of the state.

AAR said that SUDA, being a registered society, was not a panchayat or a municipality, or any board or cantonment. Besides, no documents had been produced wherefrom it could be established that SUDA was an authority that is legally entitled to and entrusted by the government with the control or management of a local fund.

Source; Business Standard 
https://www.business-standard.com/article/companies/works-under-sbm-to-attract-gst-if-not-done-for-govts-authorities-aar-122111800225_1.html