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TMI Blog2022 (4) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter referred to as "Appellant") against the Advance Ruling No. GST-ARA-67/2019-20/B-57 dated 09.09.2021, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). BRIEF FACTS OF THE CASE 3.1 Rashtriya Chemicals and Fertilizers Limited (hereinafter referred to as the "Appellant") is engaged in the business of manufacture and sale of fertilizers and industrial chemicals. The Appellant have its head office in Mumbai and have two manufacturing plants located in Maharashtra and have warehouses/ distribution networks across various states in India. 3.2 The Appellant have a Sewage Treatment Plant ('STP') at its Trombay premises. This plant uses sewage water and converts it into water for use in the factory for manufacture of the fertilizers. 3..3 The Appellant have set up a New Sewage Treatment Plant which became operational on 10 September 2019 (hereinafter referred to as 'New STP') with an objective of becoming self-dependent in meeting daily process water requirements of Trombay unit. 3.4 The Appellant have agreed to supply such treated water to Bharat Petroleum Corporation Limited (hereinafter referred to as 'BPCL') for use in refinery. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 12 Bacteria Traceable Not traceable 13 Virus Traceable Not traceable 14 E-coli Traceable Not traceable 3.8 From the above parameters, it can be seen that while MCGM water can be used for drinking purposes as well as for other purposes, the treated water can be used only for specified industrial use as the same contains impurities making it unfit for drinking purpose. It is pertinent to note that the Appellant would have to undertake ultraviolet treatment on such treated water to make it free from all impurities and make it suitable for drinking purpose. 3.9 With the above background of facts, the Appellant had preferred an application for Advance Ruling under Section 97 of CGST Act, 2017 before the MAAR on the following questions of law as to - Q. 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) having entry as "Water [other than ae ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said impugned order, the Appellant has filed the present appeal before the Maharashtra Appellate Authority for Advance Ruling (hereinafter referred to as "the MAAAR") on the following grounds: Grounds of Appeal 5.1. That the water obtained from STP is not 'purified water, and is thus, eligible for exemption from GST under SI. no. 99 of Notification 02/2017 - Integrated Tax (Rate) dated 28.06.2017. 5.2. That to understand the scope of the exemption notification, it would be relevant to understand the meaning of the term 'Water' and what it covers. Since, the term 'Water' has not been defined in the GST Law, reference has been made to the dictionary meaning of the word 'Water' from the law lexicon, which has been reproduced herein below: "Water" covers more than seventy percent of the earth's surface. It fills the oceans, rivers and lakes and is in the ground and in the air we breathe. Without water there can be no life. Today more than ever, water is both slave and master to the people. We use water in our homes for cleaning, cooking, bathing and carrying away wastes. We use water to irrigate dry farmlands so that we can grow more food. Our factories use more water than any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'purified water'. 5.8. In the case of the Appellant, the 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 obtain water for use in the factory of the Appellant as well as, if available in surplus, then the same shall also be sold for usage as an Industrial Input. 5.9. That as the words 'purified water' have not been defined under the GST Law, then applying the legal principle of 'noscitur a sociis', the meaning of the accompanying words of the term 'purified' should be looked into to derive the intent of the usage of the words after the phrase "other than" in SI. No. 99 of the Notification No. 02/2017-I.T. (Rate) dated 28.06.2017. The words, 'aerated', 'mineral', 'purified', 'distilled', 'medicinal', etc., excluded from the exemption notification, seem to indicate the intent to exclude water which has been processed from naturally available water and also used for specialized purposes. Thus, the source of initial process is water, whereas, in case of the Appellant, the source is sewage. 5.10. As submitted above, the intention of the usage of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 water would be subject to minimal treatment and would fall under the meaning of purified water and be excluded from the exemption entry. In such cases, the intention of the Government to grant exemption for supply of water would be defeated wholly. 5.14. Treated water supplied by the Appellant is not sold in sealed containers, and is, thus, eligible for exemption under GST. 5.15. It has been submitted that the Authority has failed in correctly applying the clarification of the Circular No.52/26/2018 dated 09 August 2018 which clarified that supply of drinking water, for public purposes, if not supplied in sealed containers, is exempted from GST, and held that treated water is neither supplied to be used as drinking water for pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that even in MVAT regime, there was no VAT on sale of 'treated water' in the State of Maharashtra, the relevant entry is reproduced below: Schedule A- Maharashtra VAT Act. 2002: Sr. No Name of the commodity Conditions and exceptions Rate of Tax 49 Water other than,- Nil (a) aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized water, and (b) water sold in sealed container. (c) water for injection. 5.20. Thus, in view of the exemption for water under Central 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. 5.21. It has been submitted that the Authority have failed to consider our grounds submitted on the test of purposive interpretation; that it is amply clear that the objective of the law was not to levy tax on supply of water (other than aerated, mineral, distilled, medicinal, purified, ionic, battery, de-mineralized and water sold in sealed container). It is well settled principle that the law would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purifying it. Basis this, the Department has contended that the 'Treated Water' obtained from STP (Classifiable under Chapter 2201) will not be eligible for exemption from GST in terms of entry at SI. No. 99 of the Notification No. 02/2017-C.T. (Rate) dated 28.06.2017, and the same will attract GST at the rate of 18% in terms of the entry at SI. No. 24 of Schedule III to the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 having the description "Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matters nor flavoured [other than Drinking Water packed in 20 litres bottles]. 6.4. As regards the Appellant's reliance on the well settled legal construction of 'noscitur a sociis' to interpret the term 'purified' inserted in the impugned entry at SI. No. 99 of the Notification No. 02/2017-C.T., the Department has contended that the legal principle of 'noscitur a sociis' is applied to interpret the meaning and scope of such terms of the statute, which are ambiguous and obscure, so as to comprehend the said term in the right context. The Department further contends that since the meaning of the term 'purified' use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring, contended that the impugned product, i.e., the STP Treated Water, is exempt under the GST law in terms of the provisions of entry at SI. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017, having description as "Water [other than aerated, mineral, purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container]". Shri Sonar further submitted that since the water supplied by the Appellant to M/s. BPCL is suitable for industrial use only, and not for drinking purposes, the same cannot be considered as "purified water" as mentioned under the aforesaid entry at SI. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017. The Appellant's Representative also referred to the Tamil Nadu AAAR Order in the case of M/s. New Tirupur Area Development Corporation Limited to contend the Purified water is pure H20, and have no minerals in it. Applying the ratio of this Advance Ruling Order, he contended that since the subject water has many biological and chemical impurities and contaminants, therefore, same will not be construed as "purified water", and will be eligible for exemption from levy of GST in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t purified, cannot be construed as "purified water", and made liable to GST. DISCUSSIONS AND FINDINGS 9. We have carefully gone through the appeal memorandum encapsulating the facts of the case and the grounds of the appeal along with all the additional submissions made by the Appellant during the course of the personal hearing proceedings. We have also examined the impugned Advance Ruling passed by the MAAR, wherein it has been held that "Treated Water" obtained from STP [classifiable under Chapter 2201] will not be eligible for exemption from GST in terms of the provisions of the entry at SI. No. 99 of the Exemption Notification No. 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended); and that the same will be taxable at the rate of 18% in terms of the entry at the SI. No. 24 of the Schedule III to the Notification No. 1/2017- I.T. (Rate) dated 28.06.2017. 10. On perusal of the entire case records and the submissions made by the Appellant as well as the Jurisdictional Officer, the moot issue before us is whether the impugned product, i.e., STP treated water supplied by the Appellant to M/s. BPCL, can be construed as 'purified water', or not. 11. Since, the term "pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the legal construction of "noscitur a sociis" to derive the meaning of the expression "purified", which has not been defined under the GST law, it is seen that all the expressions of the exclusion clause of the relevant entry surrounding the word "purified" have got certain specific characteristics and usage. That is, these water at their respective places of their usage cannot be replaced or substituted by any other water. In the instant case, the STP treated water, which is supplied by the Appellant to M/s BPCL for their industrial use, does not have any specific characteristics and usages as those of the other specific water, such as "aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container" mentioned in the exclusion clause of the entry under consideration as the said STP treated water can be readily replaced by municipal water. This fact is comprehensibly substantiated by the Appellant's submissions wherein it has been submitted that prior to the installation of the Sewage Treatment Plant by the Appellant, their industrial needs were being fulfilled by the municipal water supplied by MCGM. Further, it is also noteworthy tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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