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2022 (4) TMI 406 - AAAR - GSTClassification of goods - Tertiary Treated Water - whether the impugned product, TTW, supplied by the Appellant to M/s. Mahagenco, can be construed as purified water , or not? - HELD THAT - On perusal of the facts of the case, it is seen that the impugned product, i.e., TTW, is obtained after carrying out various physical and biological processes on the sewage water. By carrying out the said physical and biological processes on the sewage water inside the Sewage Treatment Plant and Tertiary Treatment Plant, the sewage water is made free from various organic and inorganic substances, such as suspended particles, grit, clays, pollutants like nitrogen, phosphorus, etc. However, even after carrying out the said physical and biological processes, water coming out from the Tertiary Treatment Plant still contains various biological contaminants, such as bacteria, virus, along with other impurities. Thus, it can be safely concluded that the resultant water is not pure due to presence of the said impurities and foreign elements. Thus, it is adequately clear that water containing anything apart from the Hydrogen and Oxygen will not be construed as pure water. It is further observed that even potable water, which is fit for human consumption, will also not be treated as pure water due to the presence of various minerals and other elements like chlorine, which are added in it to kill the harmful micro-organisms that cause diseases. Further, on application of the legal construction of noscitur a sociis to derive the meaning of the expression purified , which has not been defined under the GST law, it is seen that all the expressions of the exclusion clause of the relevant entry surrounding the word purified have got certain specific characteristics and usage - it is amply clear that the term purified , mentioned under the exemption clause of the relevant entry, will definitely not include the TTW. Hence, the impugned product, i.e., TTW, is rightfully eligible for exemption under entry at SI. No. 99 of the exemption notification no. 02/2017-C.T. (Rate) dated 28.06.2017. The Appellant s contention is agreed upon in as much as that the Government, whether the Central Government or State Government, has never intended to tax water of general purposes. Even under the GST regime, Government has clarified its intention of not levying GST on the supply of general-purpose water by way of issuance of the CBIC Circular No. 52/26/2018 dated 09 August 2018, wherein it has been clarified that supply of drinking water, for public purposes, if not supplied in sealed containers, is exempted from GST. Thus, by applying the canon of purposive construction , which gives effect to the legislative purpose/intendment, it is held that the impugned product, i.e., TTW, which can aptly be construed as water of general purpose as discussed earlier, is eligible for exemption under the relevant entry at SI. No. 99 of the exemption notification no. 02/2017-C.T. (Rate) dated 28.06.2017.
Issues Involved:
1. Taxability of Tertiary Treated Water (TTW) 2. Interpretation of "purified water" under GST law 3. Applicability of Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017 Detailed Analysis: 1. Taxability of Tertiary Treated Water (TTW): The main issue was whether TTW supplied by the Appellant to MAHAGENCO is subject to GST. The Appellant argued that TTW should be exempt from GST under Notification No. 02/2017-C.T. (Rate) dated 28.06.2017. The Maharashtra Authority for Advance Ruling (MAAR) had previously ruled that TTW is purified water and not exempt from GST, making it liable to tax at 18%. 2. Interpretation of "purified water" under GST law: The Appellant contended that TTW, which still contains impurities and is not fit for human consumption, should not be classified as "purified water." They argued that "purified water" should be interpreted using the common parlance test, meaning water intended for human consumption. The dictionary definitions of "purify" were examined, which generally mean to make pure or free from contaminants. The Appellant emphasized that TTW still contains various impurities and is not pure, thus should not be considered "purified water." 3. Applicability of Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017: The Appellant argued that TTW should be exempt from GST as it does not fit the definition of "purified water" and should be considered general-purpose water, which has historically not been taxed. The Appellate Authority agreed with the Appellant, noting that the term "purified water" in the exemption notification should not include TTW. The Authority also applied the principle of "noscitur a sociis," indicating that the term "purified" should be interpreted in the context of other specific types of water mentioned in the exemption clause, which TTW does not resemble. Conclusion: The Appellate Authority concluded that TTW is not "purified water" and should be considered general-purpose water, which is exempt from GST under entry at SI. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017. The previous ruling by MAAR was set aside, and the appeal filed by the Appellant was allowed, making TTW exempt from GST.
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