De-mineralized CETP water supply not exempt under Sl. No. 99, Notification 02/2017-IGST; AAAR confirms GST taxability

The Gujarat AAAR upheld the GAAR ruling that treated water obtained from a CETP is de-mineralized water and not eligible for GST exemption under Sl. No. 99 of Notification No. 02/2017-IGST (Rate), as amended. The appellant's new laboratory certificate was rejected as it was produced only at the appellate stage, lacked proof of laboratory accreditation, and did not specify the sampling procedure, undermining its reliability. Relying on similar reasoning of the TN AAR and relevant GST circulars, the AAAR dismissed the appeal and confirmed taxability.

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The appeal before the Appellate Authority for Advance Ruling in Gujarat involved M/s. Palsana Enviro Protection Limited challenging an Advance Ruling regarding the classification and tax treatment of treated water obtained from a Common Effluent Treatment Plant (CETP). The key issues considered in this case were whether the treated water should be exempt from GST under specific provisions and whether it should be taxed at 18%.The appellant argued that the treated water from the CETP should be exempt from GST as it does not qualify as purified water under the relevant notifications. They relied on circulars and previous rulings to support their position. The Gujarat Authority for Advance Ruling (GAAR) found that the treated water was not purified water and was used for industrial processes, not for public consumption. They concluded that the water contained dissolved minerals and chemicals, making it more akin to demineralized water, which is not eligible for exemption under the relevant notification.The Appellate Authority considered the appellant's arguments, including the production of a laboratory certificate at the appellate stage. However, they were not convinced by the certificate's credibility due to concerns about the sampling process and accreditation of the laboratory. The Authority also noted that previous rulings from the Tamil Nadu Authority for Advance Ruling supported the classification of treated water from CETP as demineralized water, which is taxable.Regarding the circulars cited by the appellant, the Authority acknowledged that certain types of water, such as treated sewage water, were exempt from GST. However, they concluded that the specific characteristics of the treated water in question did not align with the exemptions provided in the circulars.Ultimately, the Appellate Authority upheld the impugned ruling, determining that the treated water from the CETP should be taxable at 18% under the relevant notification. The appellant's appeal was rejected based on the findings and interpretations of the relevant legal framework and precedents, including the specific characteristics of the treated water and its intended industrial use.

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