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TMI Blog2024 (1) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... nates, etc. The TDS levels of the treated water as per the test report is 294 mg/1, which clearly shows the treated water is not demincralized as per the standard norms. From the above, it is clear that treated water cannot be construed as demineralized water. Water recovered out of the effluent treatment process nothing but an ordinary water which is suitable for reuse by the dyeing and bleaching units as a solvent and as a washing, rinsing medium. Thus, it aptly fits into Sl. No. 99 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 under the Heading 2201 rather than Sl. No. 24 of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 under the same Heading 2201. The common effluent treatment plant has been set up in order to comply with the legislative and environment regulations thereby conserving water through recovery and reuse and not to manufacture water or chemicals - effluent treated water is eligible for exemption as per Notification No. 2/2017-Central Tax (Rate) as amended vide Notification No. 7/2022-Central Tax (Rate), dated the 13th July, 2022. - SMT. D. JAYAPRIYA , MEMBER (CENTRAL TAX) AND SMT. N. USHA , MEMBER (STATE TAX) RULING M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diffuser arrangement for proper mixing. Backwash water, spillages, chemical cleaning water are also collected in equalisation tank. The equalized effluent is sent to biological treatment tank where it is subjected to activated sludge process to reduce organic load. This overflows into a secondary clarifier and the settled biomass is re-circulated back to aeration tank and excess is sent for sludge dewatering. The effluent then transferred to chlorine contact tank, where it is decoloured using liquid chlorine and then it is treated with sodium meta bi-sulphate/sodium thio sulphate to remove traces of chlorine. Then it enters the filtration system such Pressure sand filter, Micro filter, which remove suspended solids, turbidity and fines, organic, odour from effluent. The output product is collected in the reverse osmosis feed tank. The treated effluent is fed into three stage (I, II, III) RO system for removal of dissolved inorganic salts and 80 to 85% of water will be recovered as reusable water. Additional fourth phase (IV) and fifth phase (V) of RO treatment is done through micron cartridge filter for desalination. RO IV V reject is treated with Lime soda process in a Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious uses. The effluent water is subjected to different processes and resultant water is purified water which is meant for industrial reuse. Demineralized water : There is no definition for demineralized water in any of the rate notifications in GST. The dictionary meaning is the process of removing mineral matter or salts. The process of treating effluent water includes demineralization process and therefore, the water obtained at the end of the process is demincralized water. Demincralized water is usually made by using ion exchange, electrode ionization or membrane filtration technologies in order to create ultrapure water. In this process, removal of virtually all ionic mineral contaminants from water, so that resultant water has sufficient purity for variety of industrial applications. The water usually contains positively charged ions as Iron, Calcium, Magnesium, Copper, Sodium and Potassium and also negatively charged ions as Chloride, Carbonate, Sulphate. Bi-carbonate, Nitrate etc. Reverse Osmosis (RO) is a process where water is demineralized by flowing under pressure through a semi-permeable membrane. The outlet of MF product is serially fed to 7 stage RO s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that, Water recovered, which is demineralized water for Industrial use is classifiable under Heading No. 2201 as Waters described under Sl. No. 24 of Annexure-III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 taxable at rate of 18 per cent GST. They also relied on the ruling issued by Gujarat AAAR in the case of Aquaa Care (Surat) RO Technologies Pvt. Ltd. [[2020] 120 taxmann.com 167 (AAAR - Guj.) = 2020 (36) G.S.T.L. 115 (A.A.R. - GST - Guj.)] and ruling issued by the Karnataka AAR in the case of Water Health India Pvt. Ltd. [2020 (35) G.S.T.L. 450 (A.A.R. - GST - Kar.) = [2020] 116 taxmann.com 270/81 GST 391 (AAR - Karnataka)], wherein it was held that treated water is purified water and liable to GST. 4. The Applicants were offered personal hearing on 28-7-2023, wherein Shri G. Natarajan, Advocate (Authorised Representative-AR) appeared for the Applicant and reiterated the submissions made in the application. He stated that the treated water is partly demineralized, which is used for Industrial purposes and not suited for human consumption. Therefore, it would fall under Chapter Heading 2201 and applicable tax would be 18%. The Members asked the AR to subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents generated in the member textile dyeing units during the dyeing and bleaching process recovering maximum quantity of water, salts and other solids which could be beneficially reused, leaving zero discharge at the end of the treatment process. 6.5 As per the submissions made, at present, the Applicant is rendering the service of hazardous waste treatment and disposal services, by treating the effluent water and supplying treated water and other recovered products for reuse by the member units. Now, they have proposed to purchase effluent water from the member unit and after treating the same they propose to supply the resultant products to their member units so as to classify their activities as supply of goods. 6.6 From the various submissions of the Applicant both during the personal hearing and written submissions, it is clear that the applicant seeks to purchase the raw effluent and proposes to treat the same. The applicant proposes to sell the resultant products at market rates. 6.7 The first question to be examined is what is the appropriate classification of the treated water that would be sold by the Applicant, after carrying out various treatment process on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. Heading Description of Service Rate 24 2201 Waters including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured; Ice and snow (other than Drinking water packed in 20 litre bottles) 9% 6.11 Chapter 22 - covers Beverages, Spirits and Vinegar, covers water, non-alcoholic, alcoholic beverages. More specifically, as per explanatory notes to the Heading 2201 - Waters including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured; Ice and snow, this heading covers; (A) Ordinary natural water of all kinds (other than sea water - see Heading 25.01). Such waters remain in the heading, whether or not clarified or purified, except that distilled or conductivity water and water of similar purity are classified in Heading 28.53. The heading excludes sweetened or flavoured water (Heading 22.02) (B) Mineral Waters , whether natural or artificial Natural mineral waters contain mineral salts or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral salts. The pH of demincralized water is close to 7.0 indicating that, it is neither acidic nor basic as it is almost devoid of salts. The Total Dissolved Solids (TDS) value of the water depends on the amount of minerals that are dissolved in water. When minerals like calcium bicarbonate, magnesium sulphate, and sodium chloride increases then the TDS value increases. The TDS value of demincralized water should always be less than 10 mg/L (ppm) even as low as 1mg/1. TDS levels in spring or mineral waters, on the other hand, range from 50 to 300 mg/L. Demineralized water is suited to a large range of uses from pharmaceutical manufacturing to the automotive industry. 6.14 Upon going through the processes effected by the Applicant, the effluent water is subjected to micro-filtration and sand filtration process to remove suspended impurities. They have then used a scries of RO units for removing minerals. In spite of the RO treatment, the TDS of the treated water is higher, which can be seen from the test report. As per the report furnished by The South India Textile Research Association (SITRA) Textile Testing and Service Centre, test report No. V2300303, dated 9-8-2023 of Sampl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rate), dated the 28th June, 2017. 5.3 Accordingly, it is hereby clarified that supply of treated sewage water, falling under heading 2201, is exempt under GST. Further, to clarify the issue, the word purified is being omitted from the abovementioned entry vide Notification No. 7/2022-Central Tax (Rate), dated the 13th July, 2022. 6.19 The same analogy is applicable to the case on hand. The relevant entry in Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017 is : Sl. No. Heading Description of Service Rate 99 2201 Water [other than aerated, mineral, distilled, medicinal, ionic, battery, demineralized and water sold in sealed container] Nil 6.20 In this connection, it is observed that, all the other categories of water as mentioned in the exclusion clause have some special characteristics and specialized uses such as they are used in aerated drinks, medicinal/health uses, automotive cooling system, sterilization, laboratory application, car battery etc. The treated water in the present case would not fit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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