2021 (7) TMI 1211 - AAR - GST

Levy of GST - Forward supply - rate of GST - Tertiary Treated Water supplied by the applicant to Maharashtra State Electricity Generating Co. Ltd. (MAHAGENCO) - falling under Entry No. 99 of N/N. 02/2017-Central Tax (Rate), dt. 28-06-2017 or Entry No. 24 of N/N. 1/2017-Central Tax (Rate) dt. 28.06.2017 - HELD THAT - As per the parameters tested by the applicant, the properties of processed water generated from the sewage is different than the properties of the original sewage water received in the STP plant. Therefore, the Tertiary Treated Water is purified sewage water and since it is purified water. the same will not fall under Sr. No, 99 of Notification 02/2017-C.T. (Rale) dated 28.06.2017. Since the said entry at Sr. No. 99 mentions that water, other than purified , aerated, mineral, distilled, medicinal, ionic, battery. de-mineralized and water sold in sealed container, only will get exemption, therefore the impugned product being purified sewage water will not be exempted - the legislation does not expect, such purified water to be allowed for exemption from GST. In the subject case, the water supplied by the applicant to mahagenco is obtained after the treatment to sewage water as submitted by the applicant and the said water is not potable. Hence Entry No. 46 B which pertains to drinking water only is not applicable to the impugned product - TTW supplied by the applicant is purified Water and is covered Entry No.24 of Notification No. 01/2017-C.T. (Rate) dated 28.6.2017. The impugned goods, called as Tertiary Treated Water, is purified water which is sold to MAHACENCO for its further industrial use and falls under Entry No. 24 of Notification No. 01/2017 - the water obtained from sewage is covered under term waters . Hence it is taxable and same would be taxable @ 18% IGST under Entry 24 of Schedule-Ill of Notification No. 1/2017-Central Tax (Rate) dtd. 28.06. 2017 as amended by Notification No. 06/2018 and Central Tax (Rate) dtd. 25.01.2018.

Summary

Issues Involved:
1. Taxability of "Tertiary Treated Water" (TTW) under GST law.
2. Applicable rate of GST on TTW.

Issue-Wise Detailed Analysis:

1. Taxability of "Tertiary Treated Water" (TTW) under GST law:

The applicant, M/s. Nagpur Waste Water Management Pvt. Ltd., sought an advance ruling on whether the TTW supplied to Maharashtra State Electricity Generating Co. Ltd. (MAHAGENCO) is taxable under GST law. The applicant operates a Sewage Treatment Plant (STP) under a contract with Nagpur Municipal Corporation (NMC) and supplies TTW to MAHAGENCO for industrial use. The applicant argued that TTW should be exempt from GST under Notification No. 02/2017-CT-(Rate) dated 28.06.2017, which exempts certain types of water from GST.

The Authority for Advance Ruling (AAR) examined the nature of TTW and the relevant GST notifications. It was found that TTW undergoes various purification processes to remove contaminants, making it suitable for industrial use but not potable. The AAR referred to Sr. No. 99 of Notification No. 02/2017-CT-(Rate), which exempts water other than aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized, and water sold in sealed containers. The AAR concluded that TTW is "purified water" and, therefore, does not qualify for exemption under Sr. No. 99 of the said notification.

2. Applicable rate of GST on TTW:

The AAR further examined the applicable GST rate for TTW. The relevant entry for water under GST is found in Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 06/2018-Central Tax (Rate) dated 25.01.2018. Entry No. 24 of Schedule III specifies that waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavored, other than drinking water packed in 20 liters bottles, are subject to GST at 18% (9% CGST and 9% SGST).

The AAR determined that TTW, being purified water, falls under Entry No. 24 of Schedule III and is therefore taxable at 18% GST. The AAR rejected the applicant's contention that TTW should be exempt from GST, emphasizing that the legislation does not intend to exempt purified water from GST.

Conclusion:

The AAR ruled that TTW supplied by the applicant to MAHAGENCO is taxable under GST law and is subject to GST at the rate of 18% (9% CGST and 9% SGST). The ruling clarified that TTW is considered purified water and does not qualify for exemption under the relevant GST notifications. The detailed analysis and findings of the AAR support the conclusion that TTW is taxable at the specified rate, ensuring compliance with the GST regulations.