GST ruling: Taxable supply of Tertiary Treated Water at 18% rate

The AAR ruled that the Tertiary Treated Water (TTW) supplied by the applicant to MAHAGENCO is taxable under GST law at a rate of 18% (9% CGST and 9% SGST). The ruling clarified that TTW is considered purified water and does not qualify for exemption under the relevant GST notifications. The detailed analysis and findings of the AAR support the conclusion that TTW is taxable at the specified rate, ensuring compliance with the GST regulations.

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Issues Involved:
1. Taxability of "Tertiary Treated Water" (TTW) under GST law.
2. Applicable rate of GST on TTW.

Issue-Wise Detailed Analysis:

1. Taxability of "Tertiary Treated Water" (TTW) under GST law:

The applicant, M/s. Nagpur Waste Water Management Pvt. Ltd., sought an advance ruling on whether the TTW supplied to Maharashtra State Electricity Generating Co. Ltd. (MAHAGENCO) is taxable under GST law. The applicant operates a Sewage Treatment Plant (STP) under a contract with Nagpur Municipal Corporation (NMC) and supplies TTW to MAHAGENCO for industrial use. The applicant argued that TTW should be exempt from GST under Notification No. 02/2017-CT-(Rate) dated 28.06.2017, which exempts certain types of water from GST.

The Authority for Advance Ruling (AAR) examined the nature of TTW and the relevant GST notifications. It was found that TTW undergoes various purification processes to remove contaminants, making it suitable for industrial use but not potable. The AAR referred to Sr. No. 99 of Notification No. 02/2017-CT-(Rate), which exempts water other than aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized, and water sold in sealed containers. The AAR concluded that TTW is "purified water" and, therefore, does not qualify for exemption under Sr. No. 99 of the said notification.

2. Applicable rate of GST on TTW:

The AAR further examined the applicable GST rate for TTW. The relevant entry for water under GST is found in Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 06/2018-Central Tax (Rate) dated 25.01.2018. Entry No. 24 of Schedule III specifies that waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavored, other than drinking water packed in 20 liters bottles, are subject to GST at 18% (9% CGST and 9% SGST).

The AAR determined that TTW, being purified water, falls under Entry No. 24 of Schedule III and is therefore taxable at 18% GST. The AAR rejected the applicant's contention that TTW should be exempt from GST, emphasizing that the legislation does not intend to exempt purified water from GST.

Conclusion:

The AAR ruled that TTW supplied by the applicant to MAHAGENCO is taxable under GST law and is subject to GST at the rate of 18% (9% CGST and 9% SGST). The ruling clarified that TTW is considered purified water and does not qualify for exemption under the relevant GST notifications. The detailed analysis and findings of the AAR support the conclusion that TTW is taxable at the specified rate, ensuring compliance with the GST regulations.

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