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of <h1>Water Supply Board Wins Challenge Against GST Order, Secures Remand with Deposit Requirement and Fresh Adjudication</h1> The HC allowed a writ petition challenging a GST order against a water supply board. The court found flaws in the original order's tax assessment and ... Levy of tax, interest and penalty on the Chennai Metropolitan Water Supply and Sewerage Board (the CMWSSB) - petitioner was supplying purified water or not - HELD THAT:- On perusal of the impugned order, it is evident that the adjudication turned on two factors. First, the adjudicatory authority concluded that the petitioner was purifying the water and that the same would not fall within the scope of exemption. Learned counsel for the petitioner placed on record a note with regard to the difference between potable water and purified water. Learned counsel points out that potable water is required to conform to norms laid down in BIS:10500-2012, whereas purified water is required to fulfil the norms laid down in BIS:14543:2016. Without taking these aspects into consideration, the impugned order proceeded on the basis that the petitioner was supplying purified water. Secondly, the adjudicating authority concluded that the activity of the petitioner is a composite supply and that supply through mobile units falls within the scope of “Heading 9969” (Serial No.13), which is taxable at 18%. On such basis, CGST and SGST of Rs. 96,10,02,025/- each was imposed along with interest and penalty thereon. The order does not contain any details of the value of supply of water to house holds and other premises through pipelines; the value of supplies made through tankers on account of insufficiency of water in the relevant areas; and the value of supplies made through mobile units on account of the establishments concerned requiring higher quantities of water, which are supplied at commercial rates. Without such classification, the adjudicating authority could not have arrived at the conclusion that the principal supply is through mobile units at commercial rates. The matter is remanded for reconsideration subject to the condition that the petitioner remits a sum of Rs. 3 crores within six weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand. Issues involved: Challenge to tax, interest, and penalty imposed on the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) u/s an Act of the Tamil Nadu Legislature for water supply and sewerage provision in Greater Chennai area.Summary:The judgment addressed the challenge against an order imposing tax, interest, and penalty on the CMWSSB. The petitioner, CMWSSB, was inspected and issued summons in September 2021, followed by a show cause notice in September 2023, to which the petitioner replied. The impugned order was issued on 22.12.2023.The petitioner argued for exemption u/s Notification No.12/2017 & Notification No.2/2017, stating that providing drinking water for public purposes is exempt from GST. The petitioner also offered to remit Rs. 3 Crore as a condition for remand.The respondent contended that GST is leviable on distribution services, including water distribution, as the petitioner provides water supply through pipelines and tankers at commercial rates. The respondent maintained that the impugned order correctly identified the principal supply from the composite supply.The impugned order was found to have flaws in determining that the petitioner was supplying purified water and in concluding that the supply through mobile units falls under taxable category. The order lacked details on the value of different water supplies, leading to an incorrect classification by the adjudicating authority.The judgment set aside the impugned order and remanded the matter for reconsideration, with the condition that the petitioner remits Rs. 3 crores within six weeks. The petitioner was also allowed to submit a reply to the show cause notice within four weeks, and the respondent was directed to issue a fresh order within three months of receiving the remittance.In conclusion, the writ petition was disposed of with no costs, and the connected miscellaneous petitions were closed accordingly.
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