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2021 (9) TMI 950 - AAR - GSTClassification of goods - applicable rate of GST - supply of the sewage treated water to BPCL - forward supply - applicability of exemption under SI. No. 99 of the Exemption Notification No. 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended) as Water (other than aerated, mineral, purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container) or taxable at 18% by virtue of SI. No. 24 of Schedule - 111 of Notification No. 01/2017- Integrated Tax (Rate) dated 28th June 2017 (as amended)? HELD THAT - The essentially involved process is removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and gases from sewage water. The goal is to produce the water which is fit for being used in the factory of RCF, as well as, if it is available in surplus then the same shall be also sold; for usage as an industrial Input. The processes are carried out on raw sewage water in the STP, making it suitable for industrial use, may be said to be covered under the term purification processes . The Applicant is using sewage water as an input and is carrying out certain processes on said sewage water so that the output water obtained can be used for Industrial purposes. The water is covered under Chapter heading 2201 of GST Tariff - In the subject case, the impugned water is used by the applicant for its own use i.e. in its factory and is also supplied to BPCL. The said water is obtained after the treatment to sewage water as submitted by the applicant and the said water is not potable i.e. it is not potable. The said water is never to be used for human consumption as well as never to be used as normal water. Hence in our view entry No. 46 B which pertains to drinking water only is not applicable to the impugned product. As per the applicant s submissions, it is clear that various contaminants are removed from the sewage water, thus purifying it to make it purified sewage water which is useful for Industrial purpose. As per the contention of applicant Treated Water is not potable but it can be used for Industrial use. Hence the contention of the applicant that it is to be covered under exemption entry no 99 of Notification No. 2/2017 is not correct. The Treated water obtained from the STP 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. On the perusal of the clarification as per Circular No. 52/26/2018 dated 09.08.2018 , it is found that it is clearly mentioned that supply of drinking water for public purposes, if it is not supplied in sealed container, is exempt from GST but in the present matter, we find that the treated water is neither supplied for to be use as drinking water for public purposes, nor supplied in sealed container, as drinking water, to BPCL. Applicant has not submitted that the said treated water from sewage, is used for drinking water for public purposes, hence it should be liable for exemption under entry 99 of notification 2/2017. Therefore the contention of the applicant to allow the exemption to its impugned product, is not found acceptable - the impugned goods, called as Treated Water , is purified water which is used for own factory purposes and excess quantity sold to BPCL for its further industrial use falls under Entry No. 24 of Notification No. 01/2017. Thus, the Treated 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-III 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.
Issues Involved:
1. Eligibility of "Treated Water" obtained from STP for GST exemption under SI. No. 99 of Exemption Notification No. 02/2017. 2. Taxability of "Treated Water" obtained from STP at 18% under SI. No. 24 of Schedule III of Notification No. 01/2017. Issue-Wise Analysis: 1. Eligibility of "Treated Water" for GST Exemption: The applicant, engaged in the manufacture and sale of fertilizers and industrial chemicals, operates a Sewage Treatment Plant (STP) converting sewage water into treated water for industrial use. The applicant sought clarity on whether this treated water is exempt from GST under SI. No. 99 of Exemption Notification No. 02/2017, which exempts "Water (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container)." The applicant argued that the treated water should be considered as "water" under the exemption entry since it is not fit for drinking but suitable for industrial use. The applicant also highlighted that under the Maharashtra VAT Act, water was exempt from VAT, supporting their claim for GST exemption. However, the authority observed that the treated water undergoes significant purification processes, removing bio-waste, grit, undesirable chemicals, biological contaminants, suspended solids, and gases, making it "purified water." Since "purified water" is explicitly excluded from the exemption under SI. No. 99, the authority concluded that the treated water does not qualify for GST exemption. 2. Taxability of "Treated Water" at 18% GST: The applicant also sought clarity on whether the treated water is taxable at 18% under SI. No. 24 of Schedule III of Notification No. 01/2017, which covers "Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 litres bottles)." The authority noted that the treated water, being purified, falls under the category of "waters" as mentioned in SI. No. 24. The entry includes various types of water, and the treated water, being purified and used for industrial purposes, fits within this classification. Therefore, the treated water is subject to GST at 18%. Conclusion: The authority ruled that the "Treated Water" obtained from the STP is not eligible for GST exemption under SI. No. 99 of Exemption Notification No. 02/2017 because it is classified as "purified water." Instead, it is taxable at 18% under SI. No. 24 of Schedule III of Notification No. 01/2017. Order: 1. "Treated Water" obtained from STP is not eligible for exemption from GST under SI. No. 99 of Exemption Notification No. 02/2017. 2. "Treated Water" obtained from STP is taxable at 18% under SI. No. 24 of Schedule III of Notification No. 01/2017.
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