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2023 (9) TMI 780 - AAR - GSTClassification of goods - treated water that would be sold by the Applicant, after carrying out various treatment process on the effluent water purchased by them - rate of GST applicable on the said treated water which would be sold by the Applicant - HELD THAT - Upon going through the processes effected by the Applicant, the effluent water is subjected to micro-filtration and sand filtration process to remove suspended impurities. They have then used a series of RO units for removing minerals. In spite of the RO treatment, the TDS of the treated water is higher, which can be seen from the test report. As per the report furnished by The South India Textile Research Association (SITRA) Textile Testing and Service Centre, test report No. V2300305 dated 09.08.2023 of Sample given for testing, in the case of the Applicant, it is seen that the recovered water contains chlorides, sulphates, Bicarbonates, etc. The TDS levels of the treated water as per the test report is 444 mg/1, which clearly shows the treated water is not demineralized as per the standard norms. From the above, it is clear that treated water cannot be construed as de-mineralized water. The treated water will not fit into Sl.No. 24 of Notification No. 01/2017-CT (Rate) dated 28.06.2017. Also treated water is not demineralized water as claimed by them but water, without any special characters as indicated in the tariff entries. Thus, water recovered out of the effluent treatment process nothing but an ordinary water which is suitable for reuse by the dyeing and bleaching units as a solvent and as a washing, rinsing medium. Thus, it aptly fits into SI. No. 99 of Notification No. 02/2017, CT (Rate), dt. 28.06.2017 under the heading 2201 rather than SI. No. 24 of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 under the same heading 2201. The ultimate intention behind the effluent treatment process is to treat the effluent water discharged by textile units to recover water, salt and other chemicals consumed during the course of dyeing and bleaching to the maximum extent possible so as to reuse the same without getting it discharged to pollute water bodies. Moreover, ZLD has been mandated by the TNPCB for all the highly polluting industries including Textile Dyeing and Bleaching industries in order to prevent pollution of River water and ground water. Therefore, it is evident that the common effluent treatment plant has been set up in order to comply with the legislative and environment regulations thereby conserving water through recovery and reuse and not to manufacture water or chemicals. The effluent treated water is eligible for exemption as per Notification No. 2/2017- Central Tax Rate as amended vide notification No. 7/2022- Central Tax (Rate), dated the 13th July, 2022.
Issues Involved:
1. Classification of treated water sold by the applicant. 2. Applicable GST rate on the treated water. Summary: Issue 1: Classification of Treated Water The applicant, a common effluent treatment plant, processes effluent water from dyeing units to produce treated water. The applicant sought to classify this treated water under HSN 2201, arguing it is demineralized water. However, the Authority examined the processes and found that the treated water contains chlorides, sulphates, bicarbonates, and has a TDS level of 444 mg/l, which does not meet the standard for demineralized water. The Authority concluded that the treated water does not fit into the categories covered under HSN 2201 as demineralized water. Issue 2: Applicable GST Rate The applicant argued that treated water should attract 18% GST under S. No. 24 of Schedule III of Notification No. 01/2017-CT(Rate). However, the Authority found that the treated water, being ordinary water, is eligible for exemption under SI. No. 99 of Notification No. 02/2017-CT(Rate), which exempts water other than aerated, mineral, distilled, medicinal, ionic, battery, demineralized, and water sold in sealed containers. The Authority also referred to Circular No. 179/11/2022, which clarifies that treated sewage water attracts a Nil rate of GST, and applied the same analogy to the treated water in question. Ruling: 1. The treated water is classified under SI. No. 99 of Notification No. 02/2017-CT(Rate) as "Water [other than aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container]". 2. The treated water is eligible for exemption from GST as per the cited notification.
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