Subject: GST ON WATER SUPPLIED THROUGH TANKER

[GANESH KANCHAN]

Subject: GST ON WATER SUPPLIED THROUGH TANKER

DEAR SIR

A CO-OP SOCIETY OWNS TANKER THROUGH WHICH IT SUPPLIES WATER TO ITS MEMBERS ON ACTUAL COST BASIS. WATER IS BEING USED BY THE MEMBERS FOR WASHING AND CONSUMPTION PURPOSE. IS IT TAXABLE AS UNDER 'DISTIBUTIVE SERVICE' OR EXEMPT? KINDLY ENLIGHTEN WITH ANY AAR OR CASE LAW?

GANESH KANCHAN

[Sadanand Bulbule]

Dear Sir

The Entry No. 99 of Notification No. 2/2017-Central Tax (Rate) dated 28/06/2017 reads as under:

"Water [other than aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container]".

Thus bulk water supplied in tankers for consumption falling under tariff heading 2201 is exempt.

[Ganeshan Kalyani]

The service of arranging water supply by society to its member is covered under taxable supply.

[Sadanand Bulbule]

Dear Sir

Since the querist has used the word "on cost basis", I focused my reply with reference to HSN 2201.

However, water distribution service falls under SAC 996921 and it is liable for 18% GST. So the querist is informed to have a re-look at his query.

[KASTURI SETHI]

Dear Querist,

There are two components. Distributive service of water is taxable. There are two decisions of AARs which are as follows :-

2019 (9) TMI 1478 - AUTHORITY FOR ADVANCE RULINGS, HARYANA - IN RE : ASHIANA MAINTENANCE SERVICES LLP

2021 (8) TMI 534 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH - IN RE : VIJAYAVAHINI CHARITABLE FOUNDATION

[GANESH KANCHAN]

Dear members

Thank you so much for your favourable inputs on the subject posted. Basically it is a registered co-operative society supplying water to its members on cost to cost basis without an element of profit. Since the society owns tankers, same have been used for the said purpose.

Thank you all once again.

[GUNASEKARAN K]

Water [other than aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container is exempted.

The same supplied through mobile tanker which falling under the term of “Water Distribution Service” liable to tax at 18% GST.

AI Summary

Taxability of water supply through tanker: distributive service attracts GST while bulk water as goods may be exempt. Tax treatment turns on classification: bulk ordinary water supplied in tankers may be exempt as goods, while the arrangement and delivery of water by tanker is a Water Distribution Service treated as a taxable service. Even supplies by a cooperative on a cost recovery basis can have a taxable distributive service component, and advance rulings have upheld taxation of the distribution service in comparable fact patterns.