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TMI Blog2021 (8) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... t Treatment Plant Private Limited No. 250/1, Uthukuli Road, S. Periyapalayam, Tiruppur. 641 607 (hereinafter called the Applicant) are registered under GST with GSTIN 33AABCK3060C IZ8. The applicant has sought Advance Ruling on: (1) Whether the classification of the supply of outputs as sale of goods is correct. (2) Whether classification of water sold as Water (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container) under Heading 2201 is correct. (3) Whether classification of effluent purchased from dyeing as other wastes from chemical or allied industries (3825 69 00) is correct. (4) Whether the method of arriving value for effluent using the net realization price method is correct as there are no comparable products and cost cannot be worked out. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are an effluent treatment plant promoted by the dyeing units. They plan to buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kasipalayam CETP Salt Analysis Report dated 12.02.2021 * Kasipalayam CETP Salt Analysis Report dated 13.02.2021 * Process Flow Diagram of 4.4 MLD Capacity of Kasipalayam CETP- 100% Capacity Water Balance; * Process Description of Kasipalayam CETP * Draft Contract for Sale and Disposal of Dyeing Effluent; * Balance Sheet as on 31.03.2020 3.3 The applicant vide their e-mail dated 22.04.2021 furnished their Letter dated April 17, 2021 addressed to The Assistant Commissioner (ST), Chennimalai Assessment Circle. In the said letter, they had inter-alia stated that 01. By following the below mentioned method of process i.e Zero Liquid Discharge (Hereinafter referred as ZLD), their plant effluent treatment process will not pollute the Environment and also Noyyal river is flowing with maximum Eco Restoration. 02. Suppose they follow the traditional method i.e. before ZLD they could not save their Ecology Environment and also cannot control the Environmental pollution. 03. Based on the above-mentioned treatment process method; effluents from the specific exclusive member textile units are treated. This is also an integrated part of the dyeing unit but due to space constraint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject matter but the applicant has been issued a show cause Notice from the Central Tax Authorities and further offered the following comments: 1) Whether the classification of the supply of out puts as sale of goods is correct? The principal Supply done by the applicant is supply of way of treatment of effluents by a Common Effluent treatment plant (SAC-9994). Hence the Classification of the supply of output as sale of goods is not correct. Rate of GST on Service by way of treatment of effluent is 12% (CGST 6%) but Salt (HSN 2501) and water. (HSN 2201) are NIL rated. The classification as sale of goods may affect the revenue to the Government Exchequer. 2) Whether classification of water sold as water (other than aerated mineral, purified, distilled, medicinal, tonic battery, de-mineralized and water sold in sealed container) under heading 2201 is correct? Water discharged by the applicant is partly de- mineralized in nature. Hence the classification of water sold as other than aerated mineral, purified, distilled, medicinal, tonic battery, de-mineralized and water sold in sealed containers under 2201 is not correct. 3) Whether the classification of effluent purchased fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atment Plant were explained by the experts in the Plant. * The test report and the explanation of the experts during verification revealed that the components of the effluents were extracted separately and sent back to the dyeing units as reverse process. Again, during dyeing, the components are mixed and effluent is generated as liquid waste. Raw effluent has chlorides, sulphates majorly which is treated and extracted to the components viz. R.O. water [HSN:2201], mixed salt (HSN: 3825 majority Sodium Sulphate with less Sodium Chloride and other salts), Glauber salt (HSN: 3825 content of sodium sulphate) and Brine solutions liquid (HSN: 38256900). * In this reclassification, the plant may claim ITC on the Effluent to be treated. The applicant has wrongly classified the mixed salt with GST exempted category. But Sodium Chloride content in that common salt is only at 12% and hence HSN: 2501 will not apply. * The directors available at the time of verification submitted that IETP in the States of Maharashtra and Gujarat are operated as an integral part of the dyeing units with same GSTIN and GST on the effluent treatment is levied at the rate of 5% after issue of Notification. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Member Dyeing Units may claim additional refund claim amounting from Rs. 22,53,680/ to (as estimated with the figures reported in February 2021) which is presently available in Credit Ledger of the Member Units but could not be claimed as Refund against Inverted Duty Structure. This kind of refund will affect the State Exchequer periodically but accumulation of credit without any monetary benefit may affect the survival of the Member dyeing Units severely which may result in either affecting Foreign Exchange inflow or drastically increasing Water Pollution in Noyyal basin and Cauvery Delta. 6.2 The Jurisdictional Officer has furnished the following along with the report: 1. Test report of the output products, dated:30.3.2021 2. Letter received from the applicant, Kasipalayam CETP, dated: 17.4.2021 3. Report on nature of work done at treatment plant and the role in pollution control 4. Photographs taken during site verification 5. Comparison between estimated calculation as manufacturer and actual calculation as service provider. 7.1 We have carefully examined the statement of facts, supporting documents filed by the Applicant, oral submissions made at the time of Vir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant; From the above, it is evident that an applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. Further, as per Section 103(1) of the GST Act, the ruling is binding only on the applicant and the concerned officer or the jurisdictional officer of the applicant. In the case at hand, at Q.No.3, the applicant has sought ruling on the classification of the effluent purchased by them and at Q.No. 4 the ruling is sought on the method of arriving value for purchase of effluent. These questions are raised as recipient of the goods and not supplier of such goods. Accordingly, this questions are not liable for admission, the fact of which was already stated during the Hearing. The other two questions raised by the applicant relates to the supply made by them and on the matters specified in sub-section (2) of Section 97, therefore they are admitted and taken up for consideration. 8.1 From the various submissions before us, we find that the applicant company is formed in the year of 1994 as a Private Limited Company under the Companies Act, 1956 with 14 members units as its shareholders. All the mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Salt (in Kgs) Salt @ 22/per kg Forced Mixed Salt (in Kgs) Mixed Salt Rate @ 24/ per Kg 1. Amitham Bleaching 803 8030 328 41000 0 0 0 0 2. Dhaoashree Bleaching and Dyeing 4198 41980 4700 587500 185 3330 37720 719840 13080 313920 3. High Power Process 7479 74790 2950 368750 99 1782 42200 928400 14520 348480 4. Friends Colours 4011 40110 5882 735250 424 7632 95000 2090000 7880 189120 5. Spencer Processing Mills 5584 55840 4391 548875 294 5292 30000 660000 0 0 6. Sn Abinaya Dyers 6453 64530 5065 633125 237 4266 32400 712800 15480 371520 7. Santhi Bleaching 904 9040 1001 125125 0 0 0 0 0 8. Texwell Process 3564 35640 2930 366250 239 4302 58400 1284800 11680 280320 9. Thangamman Process 8742 87420 7840 980000 188 3384 3200 70400 6000 144000 10. Vikram Process 2970 29700 2595 324375 153 2754 17400 382800 0 0 11. Viswam Process 8245 82450 5304 663000 274 4392 11840 260480 14200 340800 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the recovered, reusable water obtained by the process of Reverse Osmosis is sold for Industrial process utilization. The water is partly de-mineralized in nature. Therefore while the CTH applicable is 2201 as stated by the applicant. The Description of the product do not fit the 'Description of Goods', 'Water(other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralised and water sold in sealed container)' given under Sl.No.99 of Notrification No. 02/2017-C. T. (Rate) dated 28.06.2017. The product is the one falling under Sl.No. 24 of Annexure-Ill of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017, which is given as under: S.No. Chapter/Heading/Sub-heading/Tariff Item Description of Goods Rate 24. 2201 Waters. including natural or artificial mineral waters and aerated waters, not containing added sugar ar or other sweetening matter not flavoured [other than Drinking water packed in 20 litre bottles] 9% 10. In view of the above, we rule as under Ruling 1. In the proposed Modus of purchase of 'Raw effluent', treat it on own account and supply the outputs at market rates, the classification of supply of o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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