GST Exemption for Desilting Services: Goa Advance Ruling GOA/GAAR/01
The Authority for Advance Ruling in Goa decided that desilting services provided to government departments are not exempt from GST.
- Ruling
- GOA/GAAR/01 of 2023-24/3902 dated 25/11/2025
- Dated
- 25 Nov 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Vaibhavi Dredging asked if river desilting services qualify for GST exemption.
- The Authority ruled these services are not exempt under Notification 12/2017.
- The state of Goa has not formally devolved waterway maintenance to local bodies.
In short
The company asked if their contract for desilting the River Sal for the Goa government was exempt from Goods and Services Tax (GST). The tax authority looked at whether this work counts as a function of a local body, like a village council or municipality. They decided that because the state government has not officially handed over the responsibility for maintaining waterways to these local bodies, the tax exemption does not apply.
What has changed
How it worked before
Many businesses assumed that any service provided to a government department related to public infrastructure, like waterways, would automatically qualify for a GST exemption.
What has changed
The authority clarified that simply performing a task listed in the Constitution's schedule is not enough to claim an exemption. The state must have passed specific laws to officially transfer that duty to local bodies. This means businesses cannot rely on general assumptions about government contracts and must check if the specific function has been legally devolved in their state.
Who this affects
Contractors and service providers who perform infrastructure or maintenance work for government departments in India.
An example
Imagine a construction firm in a different state is hired to clean a local canal. They might wonder if they can skip charging GST because the work is for the public good. This ruling suggests that unless their state has a specific law officially handing over canal maintenance to local councils, they must continue to charge GST on their invoices.
What you should do
If you are performing similar work, do not assume you are exempt from GST based on this ruling. An advance ruling only applies to the business that asked for it and its specific tax office. You should consult with a tax professional to review your specific contract and the local laws in your state regarding the devolution of powers.
If you do nothing
If you stop charging GST based on this ruling without confirming your own legal standing, you risk a tax demand for unpaid GST plus interest and penalties. A tax officer is not bound by this ruling and may view your failure to collect tax as a violation of the law. Being wrong on this point can lead to significant financial liability for your business.
The terms explained
- Devolved
- The formal legal process where a state government transfers specific powers or responsibilities to local bodies like municipalities or village councils.
- Pure Services
- A contract that involves only the provision of labor or expertise without the supply of physical goods or materials.
- Condition precedent
- A specific requirement or event that must happen before a legal right or exemption can be claimed.
The ruling in detail
Authority for Advance Ruling
Vaibhavi Dredging
GOA/GAAR/01 of 2023-24/3902 dated 25/11/2025 · Goa
Questions before the authority
- Applicability of Exemption under Sl. No. 3 (for Pure Services) or 3A (for composite supply where supply of goods does not constitute more than 25% of the value) of the Exemption Notification.
Facts
The applicant was awarded a contract by the Captain of Ports Department, Government of Goa, for the desilting of River Sal to facilitate the free movement of vessels. The applicant sought an advance ruling on whether this service qualifies for GST exemption under serial numbers 3 or 3A of Notification No. 12/2017-Central Tax (Rate).
Ruling
| Question | What the authority ruled |
|---|---|
| Applicability of Exemption under Sl. No. 3 or 3A | Not eligible for exemption The service is not in relation to a function entrusted to a Panchayat or Municipality under the Constitution. |
The Authority ruled that the services of desilting a water body provided to the Captain of Ports Department are not eligible for exemption under serial number 3 or 3A of Notification No. 12/2017-Central Tax (Rate). The ruling concluded that the specific function of maintaining waterways has not been devolved to local bodies in the State of Goa.
Reasoning
The Authority analyzed the requirements for exemption under Notification No. 12/2017-Central Tax (Rate), which requires the service to be in relation to a function entrusted to a Panchayat or Municipality under Article 243G or 243W of the Constitution. It found that while the Eleventh Schedule lists 'waterways', the State of Goa has not devolved this specific function to local bodies via legislation. Consequently, the **condition precedent** for the exemption is not satisfied, regardless of the recipient being a government department. The Authority also noted that the contract involves the supply of goods and preparatory works, making it ineligible for the 'pure services' exemption.
Provisions relied on
- Section 97(2) of the CGST/SGST Act, 2017
- Notification No. 12/2017-Central Tax (Rate)
- Article 243G of the Constitution of India
- Article 243W of the Constitution of India
- Goa Panchayat Raj Act, 1994
For the practitioner
This ruling clarifies that for GST exemptions linked to functions of local bodies, it is insufficient that the work relates to a subject listed in the Eleventh or Twelfth Schedules; the State must have **actually devolved** that function to the local body by law. Practitioners should verify the specific devolution of powers in the relevant State before claiming such exemptions. It does not decide the taxability of similar services in States where such functions have been formally devolved.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/11-order_advance_ruling_vaibhavi_dredging.pdf
Legibility of the scan, as read: high.
Prepared 14-10-2026.
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