GST Ruling: Raw Water Supply Exempt, Tanker Transport Not Taxed

The ruling clarified that the supply of raw water through tankers via the Bookwater platform retains its exempt status under GST. It classified the supply as the sale of raw water, not transport services, as tankers are merely a mode of transport without separate charges. Withholding GST TCS (1%) from suppliers for raw water was deemed unnecessary as raw water is exempt. Suppliers of raw water through the e-commerce platform are not required to register under GST if exclusively supplying exempt goods. Sewage evacuation services are taxable at 18% GST, with an exemption for suppliers with turnover below Rs. 20 Lakhs. The ruling rejected the application as the questions were deemed outside the Advance Ruling Authority's scope.

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Issues Involved:
1. Exemption status of raw water supplied through tankers via the Bookwater platform.
2. Classification of the supply of water through tankers as raw water supply or transport services.
3. Requirement for Bookwater to withhold GST TCS (1%) from suppliers before making payments for raw water.
4. GST registration requirement for suppliers making raw water sales through an e-commerce operator.
5. Applicability of 18% GST on sewage evacuation services and the exemption limit for suppliers with turnover less than Rs. 20 Lakhs.
6. GST registration applicability for all suppliers through Bookwater platform based on turnover.
7. Requirement for Bookwater to withhold GST TCS (1%) from suppliers for services rendered through the digital platform.

Detailed Analysis:

Issue 1: Exemption Status of Raw Water
The applicant inquired if raw water supplied via tankers through the Bookwater platform is exempt from GST. The ruling highlighted that raw water, classified under HSN Code 2201, is listed as exempt goods. Therefore, the supply of raw water through the platform retains its exempt status.

Issue 2: Classification of Supply
The applicant questioned whether the supply of water through tankers should be classified as raw water supply or transport services. The ruling clarified that the principal supply is the sale of raw water, with the tankers serving merely as the mode of transport. Since no separate transport charges are levied, the supply remains classified as the sale of raw water, not as a transport service.

Issue 3: Withholding GST TCS (1%) for Raw Water
The applicant asked if they need to withhold GST TCS (1%) from suppliers before making payments for raw water. The ruling stated that under Section 52 of the CGST Act, TCS is applicable only on taxable supplies. Since raw water is an exempt supply, the requirement to collect TCS does not apply.

Issue 4: GST Registration for Suppliers
The applicant sought clarification on whether suppliers making raw water sales through an e-commerce operator need to register under GST. The ruling referred to Section 23 of the CGST Act, which exempts individuals exclusively supplying exempt goods from GST registration. Therefore, suppliers of raw water through the Bookwater platform are not required to register under GST.

Issue 5: GST on Sewage Evacuation Services
The applicant queried if sewage evacuation services are subject to 18% GST and if the exemption limit of Rs. 20 Lakhs applies to individual suppliers. The ruling confirmed that sewage evacuation services fall under SAC 999411 and 999412 and are taxable at 18%. However, suppliers with a turnover below Rs. 20 Lakhs are exempt from GST registration, as per Notification No. 65/2017-Central Tax, amended by Notification No. 06/2019-Central Tax.

Issue 6: GST Registration Based on Turnover
The applicant asked if GST registration is required for all suppliers through the Bookwater platform or only those with a turnover exceeding Rs. 20 Lakhs. The ruling reiterated that suppliers with a turnover below Rs. 20 Lakhs are exempt from GST registration, aligning with the notifications mentioned above.

Issue 7: Withholding GST TCS (1%) for Services
The applicant inquired if they need to withhold GST TCS (1%) from suppliers for services rendered through the digital platform. The ruling stated that TCS is applicable only when the supplier has a valid GSTIN. Since most suppliers have a turnover below Rs. 20 Lakhs and are not registered, TCS withholding is not required. However, for registered suppliers, TCS at 1% must be collected and remitted.

Conclusion:
The ruling concluded that the questions raised by the applicant do not pertain to the supplies made or proposed to be made by them as an e-commerce operator. The authority held that the questions are not admissible for ruling under Section 95(a)/103 read with Section 97(2) of the Act. Specifically, the questions on the classification of supply, applicability of notifications, and TCS provisions were deemed outside the scope of the Advance Ruling Authority. Therefore, the application was rejected.

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