Tertiary Treated Water qualifies for GST exemption under entry 99 of notification 02/2017-C.T. despite treatment processes

The AAAR held that Tertiary Treated Water (TTW) supplied to a power company qualifies for GST exemption under entry 99 of notification 02/2017-C.T. The authority determined that TTW, despite undergoing physical and biological treatment processes, contains biological contaminants and impurities, thus cannot be classified as "purified water." Applying the noscitur a sociis principle and purposive construction, the AAAR concluded that TTW constitutes general-purpose water eligible for exemption, consistent with the government's intent not to tax water for general purposes under GST regime.

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Issues Involved:
1. Taxability of Tertiary Treated Water (TTW)
2. Interpretation of "purified water" under GST law
3. Applicability of Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017

Detailed Analysis:

1. Taxability of Tertiary Treated Water (TTW):
The main issue was whether TTW supplied by the Appellant to MAHAGENCO is subject to GST. The Appellant argued that TTW should be exempt from GST under Notification No. 02/2017-C.T. (Rate) dated 28.06.2017. The Maharashtra Authority for Advance Ruling (MAAR) had previously ruled that TTW is purified water and not exempt from GST, making it liable to tax at 18%.

2. Interpretation of "purified water" under GST law:
The Appellant contended that TTW, which still contains impurities and is not fit for human consumption, should not be classified as "purified water." They argued that "purified water" should be interpreted using the common parlance test, meaning water intended for human consumption. The dictionary definitions of "purify" were examined, which generally mean to make pure or free from contaminants. The Appellant emphasized that TTW still contains various impurities and is not pure, thus should not be considered "purified water."

3. Applicability of Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017:
The Appellant argued that TTW should be exempt from GST as it does not fit the definition of "purified water" and should be considered general-purpose water, which has historically not been taxed. The Appellate Authority agreed with the Appellant, noting that the term "purified water" in the exemption notification should not include TTW. The Authority also applied the principle of "noscitur a sociis," indicating that the term "purified" should be interpreted in the context of other specific types of water mentioned in the exemption clause, which TTW does not resemble.

Conclusion:
The Appellate Authority concluded that TTW is not "purified water" and should be considered general-purpose water, which is exempt from GST under entry at SI. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28.06.2017. The previous ruling by MAAR was set aside, and the appeal filed by the Appellant was allowed, making TTW exempt from GST.

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