2026-VIL-24-AAAR
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SGST AAAR

GST – Kerala AAAR - Taxability of fees for conversion of wetland to dryland under Reverse Charge - Whether the fee paid by the company for conversion of wetland to dryland by the State Government constitutes consideration for a taxable supply of service liable to GST under RCM or falls within the exemption provided under Notification No. 14/2017-Central Tax (Rate) as an activity entrusted to Panchayats under Article 243G of the Constitution read with the Eleventh Schedule – HELD - The fee paid for conversion of wetland to dryland constitutes consideration for a taxable supply of service by the State Government liable to GST under RCM as per Notification No. 13/2017-Central Tax (Rate) - The land conversion is legally and factually distinct from land improvement. While land improvement refers to enhancing the quality or productivity of existing land without changing its classification, land conversion means changing the legal classification of land itself from one category to another, such as from wetland to dryland. The Eleventh Schedule of the Constitution, read with Article 243G, expressly lists land improvement as a function entrusted to Panchayats but makes no mention of land conversion - The activity of converting land from wetland to dryland cannot be equated with any of the activities listed as entrusted to Panchayats under Article 243G of the Constitution. The fee charged represents a consideration or compensation for conferring a private benefit to the applicant at the cost of the public good of conservation of paddy land and wetland - The State Government, by exercising its statutory power to permit conversion of land for the exclusive benefit of the applicant, supplies a taxable service within the scope of Item 5 of Notification No. 13/2017-Central Tax (Rate), which subjects services supplied by State Government to business entities to GST under RCM - The ruling given by the Authority for Advance Ruling is upheld and the appeal is dismissed
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