2025 (3) TMI 311 - AAAR - GST

CETP treated water classified as de-mineralized water, loses GST exemption under Notification 02/2017

In Re: M/s. Palsana Enviro Protection Limited.

The AAAR Gujarat dismissed the appeal regarding GST exemption for treated water from CETP. The appellant claimed the water was not de-mineralized and ... Classification of goods - Treated Water’ obtained from CETP - exemption from GST by virtue of SI. No. 99 of the Exemption Notification No. 02/2017-Integrated Tax (Rate), dated 28-6-2017 (as amended) - HELD THAT:- The appellant has not controverted the findings except for the averment that it is not a de-mineralized water. The appellant has also produced a laboratory certificate, which was not produced before the GAAR. It is not inclined to accept the certificate produced by the appellant because [a] the same is being produced at an appellate stage; [b] the certificate nowhere states that the laboratory is an accredited laboratory and [c] there is no mention about the manner in which the sample was drawn. It goes without saying that drawal of sample is sacrosanct, failing which the credibility of the results is questionable. The Tamilnadu Authority for Advance Ruling has held that treated water obtained from CETP, is de-mineralized water and will therefore not be eligible for the benefit of the notification Nos. No. 2/2017-CT(R) dated 28.6.2017 as amended vide notification No. 7/2022-CT(R) dated 13.7.2022, in the case of M/s. Mannarai CETP P Ltd. [2024 (7) TMI 358 - AUTHORITY FOR ADVANCE RULING, TAMILNADU]. While circular No. 52/26/2018-GST dated, 9.8.2018, clarifies that supply of drinking water for public purposes, if it is not supplied in a sealed container, is exempt from GST, likewise, circular no. 179/11/2022-GST dated 3.8.2022 clarified that supply of treated sewage water, falling under heading 2201, is exempt under GST and that the word ‘purified’ is being omitted from the above-mentioned entry vide notification No. 7/2022-Central Tax (Rate), dated 13.7.2022. Appeal dismissed. 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.