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2019 (7) TMI 1605 - AAR - GSTClassification of goods - rate of GST - water sold in non-sealed container - water sold in containers - whether selling of container and water is composite supply? - N/N. 1/2017 - Central Tax (Rate) dated 28th June 2017. Classification when the water is sold in non-sealed container - rate of GST - HELD THAT - The classification and HSN code of water is 2201 - Since the applicant has himself claimed that they will be selling purified water, it is not eligible for benefit under Sr. No. 99 of Notification no. 02/2017 -Central Tax (Rate) dated 28-062017 - Circular no. 52/26/2018-GST, dtd. 09.08.2018 issued from F.No. 354/255/2018-TRU clearly states, at para 6.3, that water other than those excluded from Sr. No. 99 of Notification No. 02/2017 -Central Tax (Rate) dated 28-06-2017 would attract GST at NIL rate - Since purified water is excluded from Sr. No. 99 of Notification No. 02/2017 -Central Tax (Rate) dated 28-062017, it will not be eligible for nil rate of duty. Composite Supply or not - selling water in containers - whether selling of container and water is composite supply? - HELD THAT - The selling water in containers is composite supply as the principal activity is selling of purified water only.
Issues Involved:
1. Classification and HSN code for water sold in non-sealed containers. 2. Determination of whether selling water in containers constitutes a composite supply. Issue-wise Detailed Analysis: 1. Classification and HSN Code for Water Sold in Non-sealed Containers: The applicant sought clarity on the classification and HSN code for water sold in non-sealed containers. The relevant provisions under Notification No. 01/2017-Central Tax (Rate) and Notification No. 02/2017-Central Tax (Rate) were examined. The applicant argued that purified water sold in non-sealed containers should be exempt from GST based on the interpretation of the notifications and a press release from the 28th GST Council meeting, which stated that "water supplied for public purposes (other than in sealed containers) does not attract GST." However, the judgment clarified that purified water, whether sold in sealed or non-sealed containers, is not exempt from GST. The exemption applies only to water that is not aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized, or sold in sealed containers. The ruling emphasized that the specific exclusion of purified water from the exemption list indicates that purified water, even when sold in non-sealed containers, is subject to GST. Thus, the classification and HSN code for purified water remain under Chapter 2201, and it is taxable at the applicable rate. 2. Composite Supply of Water and Containers: The applicant also queried whether the sale of water in containers constitutes a composite supply. According to Section 2(30) of the CGST Act, 2017, a composite supply involves two or more taxable supplies of goods or services that are naturally bundled and supplied together in the ordinary course of business, with one being the principal supply. The ruling confirmed that selling water in containers meets the criteria for a composite supply, as the principal supply is the water, and the containers are ancillary to the supply of water. Consequently, the tax rate applicable to the principal supply (water) applies to the entire composite supply. Ruling: Question 1: The classification and HSN code of water sold in non-sealed containers is 2201. However, purified water, whether sold in sealed or non-sealed containers, does not fall under Sr. No. 99 of Notification No. 02/2017 and is subject to GST. Question 2: The sale of water in containers constitutes a composite supply, and the tax rate applicable to the principal supply (water) applies to the entire composite supply.
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