Demineralized treated water under CETP-ZLD process remains taxable and does not qualify for the water exemption.

Water produced through ultrafiltration and reverse osmosis in a CETP-ZLD process was treated as demineralized water because it contained only negligible dissolved minerals and chemicals. As demineralized water is specifically excluded from the GST exemption entry for ordinary water, the supply did not qualify for nil-rate treatment. It was classified under Chapter 2201 and fell within the taxable entry for waters not otherwise exempt, attracting GST at 18%.

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Issues: Whether ZLD treated water (RO) obtained after ultrafiltration and reverse osmosis is classifiable under Chapter 2201 and whether it is covered by the GST exemption for water or falls under the taxable entry for waters not containing added sugar or flavouring.

Analysis: The water emerging from the CETP and ZLD processes was found to contain only a minute amount of dissolved minerals and chemicals and to be virtually free from toxic materials. On that basis, it was treated as demineralized water rather than water eligible for exemption under the entry covering water other than aerated, mineral, distilled, medicinal, ionic, battery, demineralized and water sold in sealed containers. Since demineralized water is specifically excluded from the exemption entry, the supply was held not to qualify for nil-rate treatment.

Conclusion: ZLD treated water (RO) is classifiable under Chapter 2201, is not exempt under Entry No. 99 of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017, and is taxable at 18% under Entry No. 24 of Schedule III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.

Final Conclusion: The ruling affirms that treated water produced through the CETP-ZLD process is a taxable supply of demineralized water and does not enjoy the exemption available to ordinary water.

Ratio Decidendi: Water that has undergone treatment removing impurities but still retains only negligible dissolved minerals is to be treated as demineralized water and, if specifically excluded from the exemption entry, remains taxable under the relevant tariff entry for waters not otherwise exempt.

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