2018 (6) TMI 516 - AAR - GST

Classification of goods - Supply of goods - applicable rate of GST - Power Driven Pumps used for dispensing an exact nature of water such as clear, raw, storm, waste or sewerage - Whether the goods supplied by the applicant are covered under Sl. No. 192 of Schedule II of N/N. 1/2017-Central Tax (Rate), dated 28.06.2017 issued under the Central Goods and Services Tax Act, 2017 and corresponding Notifications issued under the Gujarat Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017? - Interpretation of statute. Held that - It is now well settled principle of interpretation of statue that the word not defined in the statute must be construed in its popular sense, meaning that sense which people conversant with the subject matter with which the statue is dealing would attribute to it . It is to be construed as understood in common language - The terms sewage and water have been separately used in the said Notification and therefore the term water cannot be said to include sewage or waste. Had the intention of the legislature been to include sewage also in the term water for the purpose of Notification No. 1/2017-Central Tax (Rate), then the term sewage and water would not have been separately used, as is the case at Sl. No. 238 of Schedule III of the said Notification. Ruling - The product Pumps for sewage or waste would not be covered by Sl. No. 192 of Schedule II of N/N. 1/2017-Central Tax (Rate), dated 28.06.2017 and corresponding Notifications issued under the GGST Act 2017 and the IGST Act, 2017.

Summary

Issues:
1. Interpretation of Chapter Heading 8413 for Power Driven Pumps handling water.
2. Eligibility for GST rate of 12% on supply of goods.

Issue 1: Interpretation of Chapter Heading 8413:
The applicant, a manufacturer of Power Driven Pumps primarily designed for handling water, sought clarification on the applicability of Chapter Heading 8413 for their pumps. They argued that the phrase 'handling water' encompasses clear, raw, storm, waste, or sewerage water, making their pumps fall under the description provided in Chapter Heading 8413 of the GST Tariff, attracting a 12% GST rate. The applicant differentiated their pumps from those designed for chemical or fuel handling, which attract a higher GST rate of 28%.

Issue 2: Eligibility for GST rate of 12%:
The Authority analyzed whether the term 'water' in the relevant GST Notification includes sewage or waste. Referring to Schedule II and Schedule III of Notification No. 1/2017-Central Tax (Rate), it was observed that 'sewage' and 'water' were distinctly listed, indicating that 'water' does not include 'sewage.' The Authority applied the common parlance test, stating that 'water' is commonly understood as clear or raw water, excluding sewage. The Authority also dismissed the applicability of past judgments, emphasizing the unique context of the current case.

Conclusion:
The Authority concluded that pumps designed for sewage or waste do not fall under Sl. No. 192 of Schedule II of Notification No. 1/2017-Central Tax (Rate), hence not eligible for the 12% GST rate. The ruling specified that 'Pumps for sewage or waste' are not covered under the mentioned notification and corresponding acts, thereby clarifying the GST rate applicability for such products.