Treated industrial water exemption denied; CETP output held taxable at 18% as de-mineralized water.

Industrial effluent water treated in a Common Effluent Treatment Plant and obtained after reverse osmosis, but still containing residual dissolved minerals and chemicals, was treated as de-mineralized water used for industrial process supply rather than exempt general water. The exemption under Sl. No. 99 of Notification No. 02/2017-Integrated Tax (Rate) was read as covering ordinary water and not commercially processed treated water of this kind. The later deletion of the word "purified" by Notification No. 7/2022-Central Tax (Rate) did not change that position. The treated water was therefore held taxable at 18% under Sl. No. 24 of Schedule III of Notification No. 01/2017-Integrated Tax (Rate).

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Issues: Whether treated water obtained from a Common Effluent Treatment Plant and classifiable under Heading 2201 is eligible for exemption under Sl. No. 99 of Notification No. 02/2017-Integrated Tax (Rate) dated 28-6-2017, or is taxable at 18% under Sl. No. 24 of Schedule III of Notification No. 01/2017-Integrated Tax (Rate) dated 28-6-2017.

Analysis: The treated water was found to be the product of industrial effluent processing and reverse osmosis, with residual dissolved minerals and chemicals, and was used by industries for process purposes rather than as public drinking water. The exemption entry was read as covering general water, while excluding specified categories of commercially processed water. The removal of the word "purified" by Notification No. 7/2022-Central Tax (Rate) did not alter the conclusion that the product was not the kind of water intended for exemption. The treated water was treated as de-mineralized water and not as exempt water under the notification.

Conclusion: The treated water was held not eligible for exemption under Sl. No. 99 and was held taxable at 18% under Sl. No. 24 of Schedule III.

Final Conclusion: The advance ruling answered the reference against the applicant and confirmed GST liability on the treated water supplied from the CETP.

Ratio Decidendi: Industrially treated effluent water containing residual minerals and used for industrial process supply falls outside the exemption for general water and is taxable as covered by the relevant charging entry.

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