2024 (3) TMI 741 - AAAR - GST

Classification of supply of goods - Water including natural or artificial mineral waters and aerated waters, not containing added sugar or sweetening matter, not flavoured (other than drinking water packed in 20 litre bottles) - to be classified under heading 2201 or not - HELD THAT - The issue in the instant case requires a re-examination by the AAR, especially in view of the fact that a test report is now available in respect of a sample of the appellant themselves, and in view of the fact that such other documents like consent letter, process explanation, etc., have also been adduced by the appellant. The interest of justice will be met by remanding the case to the lower authority, with a direction to re-visit the issue, take into cognizance the documents now available such as the test report, consent order, etc., and to pass necessary orders as per the provisions of law, after offering an opportunity of personal hearing to the appellant - The matter is remanded to the Lower Authority for re-examination and passing of appropriate fresh orders into the matter, after following the principles of natural justice.

Summary

Issues Involved:
1. Classification of treated water from effluents.
2. Applicability of GST exemption under Heading 2201.
3. Comparison with sewage treatment plants.
4. Consideration of additional documents and test reports.

Summary:

1. Classification of Treated Water from Effluents:
The appellant, an effluent treatment plant, sought an advance ruling on whether the classification of their output as a supply of goods under Heading 2201 is correct. The Advance Ruling Authority (AAR) initially classified the treated water as "Water (other than aerated, mineral, distilled, medicinal, ionic, battery, demineralized and water sold in sealed container)" under Heading 2201, exempting it from GST.

2. Applicability of GST Exemption under Heading 2201:
The appellant argued that the AAR erred in classifying the treated water under Heading 2201, asserting that the treated water, known as RO Permeate, is not fit for human consumption and should not be classified as water under Heading 2201. They contended that the RO Permeate should be classified under CTH 2853 - Other inorganic compounds, or as demineralized water under Heading 2201 if considered as water.

3. Comparison with Sewage Treatment Plants:
The appellant contended that the AAR incorrectly equated their effluent treatment plant with sewage treatment plants, failing to recognize the differences in the characteristics and processing of dyeing effluents compared to sewage. They highlighted that the treated sewage water is allowed for irrigation and discharge into water bodies, whereas RO Permeate is restricted to reuse in dyeing units only.

4. Consideration of Additional Documents and Test Reports:
The appellant submitted additional documents, including a test report by the South India Textile Research Association (SITRA) and a Consent Order from the Tamil Nadu Pollution Control Board, which were not available during the initial ruling. These documents classify the RO Permeate as industrial use water, not fit for human consumption, and specify its reuse by dyeing units only.

Conclusion:
The Appellate Authority found that the issue requires re-examination by the AAR, considering the new test report and additional documents submitted by the appellant. The case was remanded to the AAR for fresh examination and order, ensuring the principles of natural justice are followed. The previous ruling by the AAR was set aside.