GST exemption denied for purified water in unsealed cans - Legal interpretation clash

The case addressed the issue of whether the supply of purified drinking water in empty unsealed cans to the public is exempt from GST. The applicant argued that purified water in unsealed containers should be exempt based on certain legal interpretations and references to relevant notifications and circulars. However, the authority interpreted the law differently, concluding that purified water, regardless of packaging, is not entitled to GST exemption as it is specifically excluded from the exemption list. Therefore, the ruling determined that the supply of purified drinking water in unsealed containers does not qualify for GST exemption.

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Issues Involved:
1. Whether supply of purified water to the public in empty unsealed cans is exempt under GST law.

Issue-wise Detailed Analysis:

1. Whether supply of purified water to the public in empty unsealed cans is exempt under GST law:

Applicant's Interpretation of Law:
- The applicant referenced Entry No. 99 of Notification No. 2/2017 - Central Tax (Rate) dated 28th June 2017, which exempts the supply of water, except for certain types including aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized, and water sold in sealed containers.
- The applicant argued that the term "water sold in sealed container" should be read in conjunction with other types of water listed, implying that purified water in unsealed containers should be exempt from GST.
- They cited the Law Lexicon dictionary and the case of Sukhnandan V. Suraj Bali, which emphasized the conjunctive use of the word "and."
- The applicant also referred to Circular No. 52/26/2018 dated 9th August 2018, which clarified that water supplied for public purposes, if not in sealed containers, is exempt from GST.

Findings and Discussion:
- The authority reviewed the provisions of the CGST and SGST Acts, which are similar except for a few specific provisions.
- The applicant entered into agreements with local panchayats/municipalities to supply purified water to the public through Community Water Systems (CWS) at an economical price.
- The water treatment process includes removing suspended solids, organic matter, chlorine, and pathogens, resulting in purified drinking water.
- The purified water is supplied in unsealed containers brought by the public, for which the applicant charges a nominal fee.
- The authority examined the relevant notification and circular, noting that the exemption applies to water other than those specifically excluded, including purified water and water sold in sealed containers.

Legal Interpretation:
- The authority noted that the word "and" in the notification should be interpreted in its ordinary grammatical sense, which is conjunctive.
- However, the Supreme Court in S.G. Glassworks Private Limited vs Collector of Central Ex., Nagpur, and the Allahabad High Court in Sukhnandan V. Suraj Bali, indicated that "and" could be read as disjunctive based on context to avoid absurdities.
- Applying this principle, the authority concluded that "water sold in sealed container" is a separate category from other types of water listed, meaning purified water, whether in sealed or unsealed containers, is excluded from the exemption.

Conclusion:
- The supply of purified drinking water in unsealed containers is not entitled to GST exemption as purified water is specifically excluded from the exemption list in Entry No. 99 of Notification No. 2/2017-Central Tax (Rate) dated 28th June 2017.

Ruling:
- The supply of purified drinking water to the public in empty unsealed cans is not entitled to exemption from GST.

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