Flow Meter Maintenance Not Composite Supply – Taxable at 18% | AAR

Case Details: Greater Visakhapatnam Smart City Corporation Ltd., In re [2025] 180 taxmann.com 454 (AAR-ANDHRA PRADESH)

Judiciary and Counsel Details

• K. Ravi Sankar & B. Lakshmi Narayana, Member
• M. Ravi Teja, CA for the Applicant.

Facts of the Case

The applicant, a special purpose vehicle of the State Government and a municipal corporation, implemented a sewerage and recycled water project under a tripartite arrangement with the Greater Visakhapatnam Municipal Corporation (GVMC) and Hindustan Petroleum Corporation Limited (HPCL), wherein recycled water was supplied to HPCL and its quantity was measured through flow meters installed at the end-user premises. The applicant sought an advance ruling from the Authority for Advance Ruling (AAR) on whether the maintenance charges of such flow meters formed part of a composite supply with the supply of recycled water and, if not, the applicable rate of tax. The applicant submitted that the maintenance of the flow meters installed at HPCL’s premises, used solely to record recycled water, required classification independent of the principal supply of water. The matter was accordingly placed before the AAR.

AAR Held

The AAR held that the maintenance of flow meters constituted a standalone supply of service and did not form part of any composite supply linked to the supply of recycled water. The AAR observed that the activity fell under Heading 9987 as an independent maintenance service and was taxable at 18 percent in terms of “Notification No. 11/2017-Central Tax (Rate), dated 28-06-2017” as amended. The AAR further held that the maintenance activity was to be assessed as a standalone supply in accordance with the classification entry applicable to maintenance services. The ruling was issued in favour of the revenue.