Private company water distribution services to society residents taxable under GST at 18% rate

The AAR Haryana ruled that water distribution services provided by a private limited company to society residents constitute taxable supply under GST Act 2017. The applicant sought clarification on taxability of water supply activities. The authority determined that exemption under notification 12/2017 applies only to services provided by local authorities/municipalities under constitutional provisions, not private companies. Since the applicant operates as private limited company registered under Companies Act 2013, the water distribution activity falls within business definition and constitutes taxable supply. The services attract 18% GST under HSN/SAC code 996921 for water distribution services.

---

---

Issues:
- Applicant's eligibility for seeking an advance ruling
- Whether the activities mentioned are covered under the GST Act
- HSN/SAC Code for the covered activities
- Rate of GST to be charged on the services

Applicant's Eligibility for Seeking an Advance Ruling:
To file an application before the Authority of Advance Ruling, the applicant must meet the conditions under the CGST Act, 2017 and HGST Act, 2017. The applicant satisfied the conditions and paid the applicable fees, making them eligible to seek an Advance Ruling. The case proceeded for a hearing on the merits of the issue.

Activities Covered Under the GST Act:
The applicant, a Pvt. Ltd. company developing residential complexes, faced protests from residents regarding the applicability of GST on water supply activities. The Advance Ruling Authority examined the invoices and found that the applicant charged tax on most invoices, except in cases where residents refused to pay. The issue raised by residents led to a writ petition, but the proviso to Section 98(2) was deemed inapplicable as the applicant had not filed any appeal. The main issue was whether supplying water to residents constituted a taxable event under the GST Act.

Analysis of Relevant Legal Provisions:
The Authority analyzed various sections of the CGST Act, 2017 to determine the taxability of the water distribution system activity. The scope of supply under the Act includes all goods and services not explicitly exempted. The applicant's water distribution system was considered a taxable supply as part of their business activities. Exemptions under the Act did not apply to the applicant's case, making the activity subject to GST.

Conclusion and Ruling:
After thorough analysis, the Authority concluded that the water distribution services provided by the applicant were taxable under the CGST/HGST Act, 2017. The ruling provided answers to the applicant's queries: the activities were covered under the GST Act, the HSN/SAC code was 996921 (Water distribution Services), and the applicable rate of GST was 18%.

This detailed analysis of the judgment highlights the legal considerations, factual background, and the Authority's ruling on the taxability of the water supply activities under the GST Act.

---