Appellate Authority exempts potable water supply under Notification 2/2017-CT (R)

The Appellate Authority ruled that the supply of potable water by the appellant is exempt under Notification No. 2/2017-CT (R). The appeal was disposed of with the Appellate Authority concurring with the AAR's rulings on other questions raised by the appellant, including the taxability or exemption of sewage treatment charges, consultancy services, and various incidental charges.

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Issues Involved:
1. Taxability or exemption of various activities of the appellant, including sale of water, sewage treatment charges, consultancy services, and incidental charges.
2. Classification of water supplied by the appellant as either potable water or purified water.
3. Applicability of GST exemptions under relevant notifications.

Detailed Analysis:

Taxability or Exemption of Various Activities:
1. Sale of Water: The appellant argued that the supply of potable water should be exempt under Notification No. 2/2017-Central Tax (Rate) and its equivalent SGST notification. The AAR had divergent views on this issue, leading to a reference to the Appellate Authority. The Appellate Authority concluded that the water supplied by the appellant is potable water, not purified water, and thus qualifies for exemption under the said notification.

2. Sewage Treatment Charges: The AAR ruled that sewage treatment services provided to Tirupur Municipal Corporation are exempt under SI.No.3 of Notification No. 12/2017-C.T.(Rate).

3. Consultancy Services: Consultancy services such as Detailed Project Report (DPR), Project Management Consultancy (PMC), and other infrastructure-related consultancy to Tiruppur City Municipal Corporation are exempt under SI.No.3 of Notification No. 12/2017-C.T.(Rate).

4. Incidental Charges:
- Interest on Receivables: Classified under SAC 999794 and taxable at 9% CGST and 9% SGST.
- Cheque Bouncing Charges: Also classified under SAC 999794 and taxable at 9% CGST and 9% SGST.
- Connection/Reconnection/Disconnection Charges: Classified under SAC 9969 and taxable at 9% CGST and 9% SGST.
- New Connection Works: Not taxable as they are considered self-service.

Classification of Water Supplied:
The main issue was whether the water supplied by the appellant is classified as potable water or purified water. The Appellate Authority determined that the water supplied is potable water, treated to meet performance standards for human consumption, and not purified water. Therefore, it falls under the exemption provided in entry 99 of Notification No. 2/2017-CT (R).

Applicability of GST Exemptions:
The Appellate Authority examined the applicability of various GST exemptions and concluded:
- The supply of potable water by the appellant is exempt under Notification No. 2/2017-CT (R).
- Sewage treatment services and consultancy services to Tiruppur City Municipal Corporation are exempt under Notification No. 12/2017-C.T.(Rate).
- Incidental charges like interest on receivables and cheque bouncing charges are taxable, while new connection works are not taxable.

Ruling:
1. The supply of potable water by the appellant is exempt under Notification No. 2/2017-CT (R).
2. The appeal is disposed of, with the Appellate Authority concurring with the AAR's rulings on other questions raised by the appellant.

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