Applicant denied exemption under Notification No. 14/2017-C.T.(Rate) for specific services. Water supply taxability in question.

The applicant was found not eligible for exemption under Notification No. 14/2017-C.T.(Rate) dated 28.06.2017. Sewage treatment and consultancy services provided were exempt under SI.No. 3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. However, interest on delayed payments, cheque bouncing charges, and connection/reconnection/disconnection charges were deemed taxable. The taxability of water supply was referred to the Appellate Authority as there were conflicting views on whether the treated water supplied to the municipal corporation qualified as purified water for taxation purposes.

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Issues Involved:
1. Taxability of various activities under GST.
2. Whether the water treatment process falls within the meaning of "purification."
3. Requirement of amendment in GST Registration Certificate.

Detailed Analysis:

1. Taxability of Various Activities under GST:
Main Business Activities:
- Sale of Water:
- The applicant abstracts raw water, treats it, and supplies it to various purchasers. The activity of treating and selling water is considered as "sale simpliciter" and not a pure service. Therefore, this activity does not qualify for exemption under Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.
- The sale of water to Tirupur Municipal Corporation (TCMC) is treated as "purified water" and is taxable under Sl.No. 24 of Schedule III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 at 9% CGST and 9% SGST.

- Sewage Treatment Charges:
- The sewage treatment services provided to TCMC are considered pure services as per Item 6 of the 12th Schedule (Article 243W) of the Constitution. These services are exempt under SI.No. 3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.

- Consultancy Services:
- Consultancy services such as Detailed Project Report (DPR) and Project Management Consultancy (PMC) provided to TCMC are considered pure services related to functions entrusted to a municipality. These services are exempt under SI.No. 3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.

Incidental to Main Business Activities:
- Interest on Receivable on Delayed Payments:
- This is considered a charge for "agreeing to tolerate an act" and is classified under SAC 999794. It is taxable at 9% CGST and 9% SGST as per Sl.No. 35 of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017.

- Disconnection, Reconnection, and Permanent Disconnection Charges:
- These charges are considered part of "Water Distribution Services" and are taxable at 9% CGST and 9% SGST as per Sl.No. 13 of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017.

- Cheque Bouncing Charges:
- These charges are for "agreeing to tolerate an act" and are taxable at 9% CGST and 9% SGST under SAC 999794 as per Sl.No. 35 of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017.

- Non-Revenue Services:
- New connection works executed as per the Concession Agreement (CA) are considered self-service and are not taxable.

2. Whether the Water Treatment Process Falls Within the Meaning of "Purification":
- Ruling per Shri. Kurinji Selvaan, V.S. Member SGST:
- The treatment process involves cleaning raw water to make it potable but does not purify it in the strict sense. Therefore, water supplied to TCMC is considered drinking water for public purposes and is exempt under entry No. 99 of Notification No. 02/2017-C.T.(Rate) dated 28.06.2017.

- Ruling per Shri. B.Senthilvelavan, Member CGST:
- The water treatment process involves filtration, sedimentation, flocculation, and chlorination, making it "purified water." Hence, the treated water supplied to TCMC and other industrial consumers is not exempt under Sl.No. 99 of Notification No. 02/2017-C.T.(Rate) dated 28.06.2017 and is taxable under Sl.No. 24 of Schedule III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017.

3. Requirement of Amendment in GST Registration Certificate:
- No specific ruling provided on the requirement of amendment in the GST Registration Certificate.

Conclusion:
- The applicant is not eligible for exemption under Notification No. 14/2017-C.T.(Rate) dated 28.06.2017.
- Sewage treatment services and consultancy services provided to TCMC are exempt under SI.No. 3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.
- Interest on delayed payments, cheque bouncing charges, and connection/reconnection/disconnection charges are taxable.
- The ruling on the taxability of water supply is referred to the Appellate Authority due to differing views.

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