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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 ..... pplicant - In the case at hand, the applicant has sought ruling on the classification of the effluent purchased by them and also 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. Classification of supply of outputs - sale of goods or not - HELD THAT:- It is evident that the applicant after entering into a contract for purchase of the Raw effluent proposes to treat the same. The process carried out in the plant is that the raw effluent received from the member dyeing units is treated/ processed through four phases for Zero Liquid Discharge system (ZLD) - the applicant proposes to purchase the Raw effluents , treat them on their own account and sell the resultant products at market rates. Therefore, in this modus of operation, the classification of the supply of outputs as sale of goods is correct. Classification of water sold as Water (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cinal, 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 ₹ 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 the effluents from the dyeing units. The effluents will be delivered from the dyeing units to them through pipelines. The effluent will be processed at the plant and the resulting products water, sulphate solution and brine solution will be sold at market rates. The delivery will be made either through pipelines/ lorry. As per the norms of Pollution control board the resulting products can be sold to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 constraints caused by already dense settled member dyeing units, the concept of Common Effluent Treatment Plant was evolved within the distance of I km radius dedicated to the 11 member units who are sole proprietors, connected by pipelines. They have been approaching government regarding GST reduction from 12 0/0 to 50/0 slab. In Maharashtra and Gujarat treatment plants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant (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 from dyeing as other wastes from chemical or allied industries (3825 69 00) is correct? The classification may be correct with the determination of chemical properties of the inputs. But the applicant may claim ITC @ 118% (CGST 9% SGST 9%) by classifying the inputs as purchase of goods with HSN 3825 69 00. This may kindly be examined care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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. But CETP and Member dyeing Units have separate GSTIN Registrations under the Act and hence rate of 5% was not notified for CETP. Moreover, the Effluent Treatment was taxable under Section 66B of the Finance Act, 1994 but Service Tax was exempted under vide Notification No.08/2017, dated: 20.02.2017 between the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Virtual hearing, submissions made after hearing, comments of the State and Center Jurisdictional Authority, DGGI Coimbatore Zonal Unit and verification report of the State Officer. The applicant has sought ruling on the following questions: 1. Whether the classific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 member units are situated in 1 km radius from the CETP. From 1999 it is undertaking primary treatment for the member units. Now it has been upgraded for Zero Liquid Discharge (ZLD) and is ready for commissioning. The applicant had been receiving t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOTAL Purchase from Member 529530 Sales to Member 5373250 Sales to Member 37674 Sales 7109520 Sales to Member 1988160 From the above it is evident that the applicant after entering into a contract for purchase of the Raw effluent proposes to treat the same. The process carried out in the plant is that the raw effluent received from the member dyeing units is treated/ processed through four phases for Zero Liquid Discharge system (ZLD) and the following output products are extracted: (i) R.O. Water (ii) Sodium Sulphate (Glauber Salt) (iii) Brine Solution (iv) Sodum Chloride (Mixed Salt) It is stated that the above output products arc sold to any of the member units as per the norms of the Pollution Control board at market rates. From the above, it is evident that the applicant proposes to purchase the Raw effluents , treat them on their own account and sell the resultant products at market rates. Therefore, in this mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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