9911796707
TMI Blog2021 (9) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... ed container)"? or 2. Whether "Treated Water" obtained from STP (classifiable under Chapter 2201] is taxable at 18% by virtue of SI. No. 24 of Schedule - 111 of Notification No. 01/2017- Integrated Tax (Rate) dated 28th June 2017 (as amended) as "Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 liters bottles)"? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- A. Statement of relevant facts having a bearing on the question (s) raised 1. RCF is engaged in the business of manufacture and sale of fertilizers and industrial chemicals to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted fine bar screens. These screens remove suspended particles above a particular size; * After screening, sewage passes through the grit separation units where inorganic grit having higher specific gravity is removed from the sewage; * De-gritted sewage then flows to Row Waste Water Channel containing Parshall flume for flow measurement; * Therefore, sewage flows to second stage fine screening chamber (with 2 mm opening) to remove floating impurities > 2mm from the waste water. These operations will remove floating and grit like impurities from sewage and increase the life of rotating equipment; * The flow after grit separation units is led to Nutrient removal sections for removal of Nitrogen and phosphorous called pre-anoxic tank; * From this stage treated sewage flows to Aeration section. The aeration tank is designed with diffused aeration system; * The aerobic tank is provided for reduction of Biological Oxygen Demand ("BOO") and Chemical Oxygen Demand ("COD") and Ammonical nitrogen from raw sewage. * The aerobic treatment is a biological process that uses oxygen to break down organic matter and remove other pollutants like nitrogen and phosphorus. It converts th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Hardness as CaCO3,ppm Max.50 60-80 5 Chemical Oxygen Demand (COD), ppm Not traceable Not traceable 6 Biological oxygen Demand (BOD) ppm Not traceable Not traceable 7 Chlorides as Cl, ppm Max.15 15-30 8 Sulphates as 504, ppm Max.15 15-25 9 Silica as SiO2, ppm <1 7-8 10 Oil and Grease, ppm Not traceable Not traceable 11 Ammonical Nitrogen as N, ppm Not traceable Not traceable From the above parameter, it can be seen that while MCGM water can be used for drinking purposes as well as for other purpose. However, the treated water can be used only for specified industrial use. 6. The broad process involved for treatment of sewage water is summarized below for ease of reference: Steps Process involved Step 1 Receipt of sewage Step 2 Removal of suspended particles through screen chamber Step 3 Inorganic grit having higher specific gravity is removed from sewage Step 4 Remove floating and grit like impurities from sewage and increase the life of rotating equipment Step 5 Removal of Nitrogen and Phosphorous called pre-anoxic tank Step 6 Biological process that uses oxygen to break down organic matter and remove other pollutan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2017 ("CGST Act") and Maharashtra Goods and Services Tax Act, 2017 ("MGST Act") on the question of law as to: Whether "Treated Water" obtained from STP [classifiable under Chapter 2201] will be eligible for exemption from GST by virtue of SI. No. 99 of the Exemption Notification No- 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended) as "water [other than aerated, mineral, purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container]" OR Whether "Treated Water" obtained from STP [classifiable under Chapter 2201] is taxable at 18% by virtue of Sl.No. 24 of Schedule- III of Notification No. 01/2017 - Integrated Tax (Rate) dated 28th June 2017 (as amended) as "Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured [other than Drinking water packed in 20 litres bottels]"? A. GST Provisions: 1. For determining the applicable GST rate of Treated Water, we have extracted the relevant entries from the GST rate schedule and the Exemption Notification (supra), pertaining to water for ease of reference: Exemption Notification No. 2/2017 - Integrated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Our factories use more water than any other mineral. We use water in rushing rivers and thundering water falls to produce electricity. The word 'water' has been used in the Act in both the senses namely (i) it is a mineral and (ii) the most common, readily and freely available substance on earth (lchchapur Industrial Coop. Society Ltd. vs. Competent Authority ONGC (1997) 2 SCC 42, 52, para 28) [Petroleum and Minerals Pipelines (Acquisition of Rights of User in Land) Act (50 of 1962), S. 2 (ba)] 2.3 From the above it can be seen that water used in factories as an industrial input is also covered under the term 'Water' and has been considered by the Law Lexicon to be included in the definition of the word 'Water'. 2.4 It is also worthwhile to note that as per the scheme of classification under the erstwhile Central Excise Tariff Act (here-in-after referred to as `CETA'), manufacture and sale of water was exempt from Central Excise. 2.5 Further, in the case of Commissioner of C.Ex. Jamshedpur vs. Kamani Foods [1999 (114) ELT 644 (Tribunal)], the Hon'ble Calcutta Tribunal in respect of matter related to classification of the product 'Treated Pure Water' held that the treated pure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that debases, pollutes, adulterates, or contaminates" "to free from foreign, extraneous, or objectionable elements" PurifiedWater(https://encyclopedia.thefreedictionary.com/purified+water) "Purified water is water that has been mechanically filtered or processed to remove impurities and make it suitable for use Purified water in colloquial English can also refer to water which has been treated ("rendered potable") to neutralize, but not necessarily remove contaminants considered harmful to humans or animals." Distilled water: Distilled water (https://dictionary.cambridge.oredictionary/english/distilled-water) "Water that has been made purer by being heated until it becomes a gas and then cooled until it becomes a liquid again" Medicinal water: Medicinal (The Law Lexicon) "Having the properties of medicine; adopted to medical use or purpose; curative (Century Dict.) Having healing properties, attributes, relating or pertaining to the science and art concerned with the cure, alleviation and prevention of disease and with restoration and prevention of health". Ionic water: Ionic (https://dictionary.cambridge.org/dictionary/english/ionic) "relating to an ato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process essentially involved is removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and gases from sewage water. The goal is to produce water fit for being used in the factory of RCF as well as if available in surplus then the same shall be also sold for usage as an Industrial Input. The process carried out on raw sewage water in the STP, making it suitable for industrial use may be said to be covered under 'purification process'. 2.8.7 While on the above, it would also be relevant to note that to further understand the meaning of the word 'purified water' in the exclusion to the exempted water, one should apply the legal maxim of noscitur a sociis i.e. the meaning of a word may be construed in conjunction with the other words and phrases used in the text. Thus, as the words 'purified water' have not been defined under the GST Law, the meaning of the accompanying words should be looked into to derive the intent of the usage of the words in SI. No. 99 after 'other than'. The words 'aerated', 'mineral, 'purified, 'distilled'. 'medicinal' etc. excluded from the exemption notification seem to indicate the intent to excluding water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant is hereby filing this Advance Ruling to understand whether the Water generated and supplied by the Applicant from the STP plant can be said to be covered under the main entry 'Water' of SI. No. 99 or would be covered under 'Purified' and hence covered under the exclusion part of the exemption notification. 3. Treated water supplied by RCF is not sold in sealed container and is thus eligible for exemption from GST 3.1 The treated water is supplied by RCF to 8PCL through a pipeline and not in a sealed container. On a perusal of the position in the erstwhile VAT and Excise regime, it is evident that the intention of the law is to tax only those waters which are normally sold in sealed containers. In other words, the intention of the law is never to levy any tax on "water which is not cleared in sealed containers." Hence, even under GST regime, the intention of law seems to provide the exemption from levy of GST for any kind of water which is not cleared in sealed container as the rates for various goods prescribed in the GST Tariff have been almost aligned with the earlier rates of Excise/ VAT. 3.2 It is pertinent to note that "waters" excluded from the exemption noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at by usage of the words 'including, the law draftsmen have intended to widen the scope of the words preceding it. Reliance in this regard is placed on the decision of The Supreme Court in the case of Krishi Utpadan Mandl Samiti vs. Shankar Industries, (1993) Supp (3) SCC 361(1) wherein it was held that where the legislature uses the words 'means' and 'includes' such definition is to be given a wider meaning and is not exhaustive or restricted to the items contained or included. Thus, placing reliance on the above, SI. No.24 is starting with the word 'Water' and then after a comma separator mentions "including natural or artificial mineral water......". Thus, one may contend that the other varieties of water is excluded from SI. No. 99 of the exemption Notification and is sought to be included in this SI. No. 24 and liable to GST rate of 18%. 4.5 However, if the actual intention of this entry is understood, it seems that the intention is to charge GST @ 18% on all kinds of water which is fit for human consumption such as 'Aerated Water' or 'Mineral water' and the intention is not to levy tax on sewage which has been subjected to certain process to purify the water. Hence, questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2/2017-Integrated Tax (Rate) dated 28 June 2017: Entry HSN Description of goods GST Rate 99 2201 Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] Exempt (NIL rate) Schedule III - Notification no. 1/2017 Integrated Tax (Rate) dated 28 June 2017: Entry HSN Description of goods GST Rate 24 2201 Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured 18% C. Additional submissions on merit: 1. Applicable GST rate on goods has been determined by GST Council considering the tax rates under the erstwhile regime (Central excise, VAT regime): It is worthwhile to note that during planning and implementation of GST, the Hon'ble Finance Minister Mr. Arun Jail-ley had announced that the tax rates under GST would be more or less in the similar band as the rates under the erstwhile indirect taxes (i.e. Central excise, VAT, etc.). An extract of the statement made by the Finance Minister and reported in https://www.news18.com/news/business/arun-jaitley-promises-no-surprises-in-ast-rate fixation-1386285. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, and (b) Water sold in sealed container. (c) Water for injection. - 0% In view of exemption for water under excise and the MVAT law and the decision taken by the GST Council, it is evidently clear that the intention of the Government was not to levy any tax on sale of 'Water'. Accordingly, supply of water (not sold in sealed container) should be exempted from payment of GST. 2. If any treatment on water would amount to purification of water, then nothing should fall under exemption entry: As you are aware, raw water obtained from ground (well/pond/bore well) and rain cannot be used in its natural form for any purpose without any minimal treatment to it. It is a general practice across the globe that water would need to be processed to the extent required for the specific end use. Basis the generic meaning of purified water, any water on which any treatment is done would amount to purified water. If that be the case, no supply of water would be eligible for such exemption as every supply would be subject to minimal treatment and would fall under the meaning of purified water and be excluded from the exemption entry. In case of the above, the intention of the Government to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the product 'Treated Pure Water' held that the treated pure water is not excisable as no mineral salts are added in the treated water. 5. Wikipedia post are not authentic and reliable: On perusal of the comments provided by Pr. Commissioner, GST/CX, we understand that reliance has been placed on the definition of 'Water treatment' available on Wikipedia basis which it has been concluded that water obtained from STP is 'Purified water'. However, it is a well-settled position that Wikipedia posts are not authentic and reliable. Wikipedia posts can be edited by anyone at any time, any information it contains at a particular time could be a work in progress or just wrong. Wikipedia entries are made by volunteer editors and contributors and are always subject to corrections and revisions. Further, the Hon'ble Supreme Court in its judgment in Comm. of Customs, Bangalore vs. ACER India Pvt. (Citation 2007(12) SCALES 81) held that Wikipedia is an online encyclopedia and information can be entered therein by any person and as such it may not be authentic and cannot be relied upon" In view of the above submissions, the Applicants pleads before the Hon'ble Advance Ruling Authority to iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Water, including natural or artificial mineral waters and aerated water, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 litres bottled") GST Provision: Exemption Notification No.2/2017 - Integrated Tax (Rate) dated 28.06.2017 (as amended) SI.No. HSN Description of goods GST Rate 99 2201 Water (other than aerated, mineral, purified, distilled, medicinal, tonic, batter, de-mineralized and water sold in sealed container Exempt Schedule-III - Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2019 (as mended) SI.No. HSN Description of goods GST Rate 24 2201 Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 litres bottle) 18 % PRAYER 1. According to Wikipedia "Water treatment is any process that improves the quality of water to make it more acceptable for a specific end-use. The end use may be drinking, industrial water supply, irrigation, river flow maintenance, water recreation or many other uses, including being safely returned to the environment. Water treatment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the application. Jurisdictional Officer Shri. Rajeev Kadam, Superintendent also appeared. 4.2 The application was admitted. Final e-hearing was conducted on 03.08.2021. The Authorized representatives of the applicant, Shri. Santosh Sonar, CA, Shri. Pravin Jain, Senior Manager, Shri. Nagesh Chandan, Asst. Manager and Smt. Mrudula Godbole were present. The Jurisdictional officer Shri. Ashok Gamre, Superintendent, Range IV, Division I, Mumbai East was present. The Authorized representatives made oral and written submission. 4.3 Heard both sides. 05. OBSERVATIONS AND FINDINGS: 5.1 We have perused the records on file and gone through the facts of the case and the submissions made by the applicant and the department. The issue involved is limited to the rate of tax i.e. classification of the impugned product, i.e. 'Treated Water' processed from sewage water; whether it is exempt or not and the applicable tax rate thereon under the GST ACT. 5.2 M/s RCF, the applicant engaged in the business of manufacture and sale of fertilizers and industrial chemicals to customers, has been successfully operating one Sewage Treatment Plant (STP) at its Trombay premises since January 2000, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither RCF or by BPCL is squarely covered under the term 'Water' as used by SI. No. 99 of the Exemption Notification. In addition, it is submitted that, as per the Maharashtra VAT Act, 2002 also, 'Water' was covered under Schedule 'A' which has NIL rate of tax. The above category of water, i.e. treated water obtained through the STP, may be said to resemble 'purified water'. However, it is noticed that since the water generated from the STP Plant is purified or treated water which makes it is suitable for industrial use, the same is to be held as excluded from the exemption notification. 5.6 We find from the submission of the applicant that the essentially involved process is removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and gases from sewage water. The goal is to produce the water which is fit for being used in the factory of RCF, as well as, if it is available in surplus then the same shall be also sold; for usage as an industrial Input. The processes are carried out on raw sewage water in the STP, making it suitable for industrial use, may be said to be covered under the term 'purification processes'. The Applicant is usi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, suspended solids, and gases from sewage water. The sewage water cannot be used, in any way, in its original form. Sewage water can be used only after it is purified and even the purified sewage water is not used for drinking purposes. It is, however, found to have industrial uses. Such sewage water is purified by applying different processes in the STP plant as mentioned by the applicant in the above written submission. Thereafter, such obtained water is called as treated water and is sold to the 'BPCL' for the industrial use. We do not find that Applicant has used it as potable or drinking water for public use. The applicant specifically admitted this fact. 5.8.4 pe the parameters tested by the applicant, the properties of processed water generated from the sewage is different than the properties of the original sewage water received in the STP plant. Therefore in our view, 'Treated Water' is purified sewage water and since it is purified water, the same will not fall under Sr. No, 99 of Notification 02/2017-C.T. (Rate) dated 28.06.2017. Since the said entry at Sr. No. 99 mentions that water, other than purified, aerated, mineral, distilled, medicinal, ionic, battery, de-mine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es" are taxable and liable to tax @18% GST. 5.10.3 In the subject case, the impugned water is used by the applicant for its own use i.e. in its factory and is also supplied to BPCL. The said water is obtained after the treatment to sewage water as submitted by the applicant and the said water is not potable i.e. it is not potable. It is not mentioned in the written contention of the applicant that the said water is used as normal drinking water for human consumption or is used for any manufacturing of 'aerated water' or 'Mineral water' or 'distilled' or 'iconic' or 'sweetening matter' etc'. So it is clear that the said water is never to be used for human consumption as well as never to be used as normal water. Hence in our view entry No. 46 B which pertains to drinking water only is not applicable to the impugned product. 5.10.5 The Dictionary meaning of Purification is "the removal of contaminants from something." Thus, Purified water means water on which any process has been carried out for removal of contaminants for making it fit for use. In the present case applicant has undertaken certain processes which involves removing of bio-waste, grit and removing undesirable chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for public purposes, if it is not supplied in sealed container, is exempt from GST' but in the present matter, we find that the treated water is neither supplied for to be use as drinking water for public purposes, nor supplied in sealed container, as drinking water, to BPCL. Applicant has not submitted that the said treated water from sewage, is used for drinking water for public purposes, hence it should be liable for exemption under entry 99 of notification 2/2017. Therefore the contention of the applicant to allow the exemption to its impugned product, is not found acceptable. 5.11 In view of the above discussions, we agree with views of jurisdictional officer and hold that the impugned goods, called as "Treated Water", is purified water which is used for own factory purposes and excess quantity sold to 'BPCL' for its further industrial use falls under Entry No. 24 of Notification No. 01/2017 mentioned above. 5.12. During the course of hearing and in the written submission, applicant has cited different case laws which are on record. The same are considered. Levy of GST is based on supplies made and the description shown in the HSN code mentioned in Notification Schedule rate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
