TaxTMI 
TaxTMI 
2021 (9) TMI 950
X X X X Extracts X X X X
X X X X Extracts X X X X
....attery, de-mineralized and water sold in sealed container)"? or 2. Whether "Treated Water" obtained from STP (classifiable under Chapter 2201] is taxable at 18% by virtue of SI. No. 24 of Schedule - 111 of Notification No. 01/2017- Integrated Tax (Rate) dated 28th June 2017 (as amended) as "Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 liters bottles)"? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- A. Statement of relevant facts having a bearing on the question (s) raised 1. RCF is engaged in the business of man....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s received in a receiving chamber; • From receiving chamber, the said sewage is passed through screen chamber. The screen chamber has auto operated fine bar screens. These screens remove suspended particles above a particular size; • After screening, sewage passes through the grit separation units where inorganic grit having higher specific gravity is removed from the sewage; • De-gritted sewage then flows to Row Waste Water Channel containing Parshall flume for flow measurement; • Therefore, sewage flows to second stage fine screening chamber (with 2 mm opening) to remove floating impurities > 2mm from the waste water. These operations will remove floating and grit like impurities from sewage and increase the life of rotating equipment; • The flow after grit separation units is led to Nutrient removal sections for removal of Nitrogen and phosphorous called pre-anoxic tank; • From this stage treated sewage flows to Aeration section. The aeration tank is designed with diffused aeration system; • The aerobic tank is provided for reduction of Biological Oxygen Demand ("BOO") and Chemical Oxygen ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce. A certified copy of the same is also enclosed and marked as 'Exh.-3" Sr. No. Parameter New STP treated water parameters MCGM drinking water 1 pH 6.8-7.2 7.1-7.3 2 Total Suspended Solids (TSS), ppm Nil 10-20 3 Total dissolved solids (TDS), ppm Max.25 80-120 4 Total Hardness as CaCO3,ppm Max.50 60-80 5 Chemical Oxygen Demand (COD), ppm Not traceable Not traceable 6 Biological oxygen Demand (BOD) ppm Not traceable Not traceable 7 Chlorides as Cl, ppm Max.15 15-30 8 Sulphates as 504, ppm Max.15 15-25 9 Silica as SiO2, ppm <1 7-8 10 Oil and Grease, ppm Not traceable Not traceable 11 Ammonical Nitrogen as N, ppm Not traceable Not traceable From the above parameter, it can be seen that while MCGM water can be used for drinking purposes as well as for other purpose. However, the treated water can be used only for specified industrial use. 6. The broad process involved for treatment of sewage water is summarized below for ease of reference: Steps Process involved Step 1 Receipt of sewage Step 2 Removal of suspended parti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4. The Applicant submits that the questions of law sought in this application, is neither pending nor has been decided in any proceedings in the Applicant's case, under any of the provisions of the Act. Accordingly, the Applicant submits that this application of Advance Ruling satisfies the above condition and should be allowed by the Honorable Members. 5. The Applicant prefers this application for Advance Ruling under Section 97 of Central Goods and Services Tax Act, 2017 ("CGST Act") and Maharashtra Goods and Services Tax Act, 2017 ("MGST Act") on the question of law as to: Whether "Treated Water" obtained from STP [classifiable under Chapter 2201] will be eligible for exemption from GST by virtue of SI. No. 99 of the Exemption Notification No- 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended) as "water [other than aerated, mineral, purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container]" OR Whether "Treated Water" obtained from STP [classifiable under Chapter 2201] is taxable at 18% by virtue of Sl.No. 24 of Schedule- III of Notification No. 01/2017 - Integrated Tax (Rate) dated 28th June 2017 (as amended) as "W....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... GST Law. Thus, the dictionary meaning of the word 'Water' from the law lexicon has been reproduced here-in below for ease of reference: "Water" covers more than seventy percent of the earth's surface. It fills the oceans, rivers and lakes and is in the ground and in the air we breathe. Without water there can be no life. Today more than ever, water is both slave and master to the people. We use water in our homes for cleaning, cooking, bathing and carrying away wastes. We use water to irrigate dry farmlands so that we can grow more food. Our factories use more water than any other mineral. We use water in rushing rivers and thundering water falls to produce electricity. The word 'water' has been used in the Act in both the senses namely (i) it is a mineral and (ii) the most common, readily and freely available substance on earth (lchchapur Industrial Coop. Society Ltd. vs. Competent Authority ONGC (1997) 2 SCC 42, 52, para 28) [Petroleum and Minerals Pipelines (Acquisition of Rights of User in Land) Act (50 of 1962), S. 2 (ba)] 2.3 From the above it can be seen that water used in factories as an industrial input is also covered under the term 'Water' and has been consider....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as under: Aerated Water: Aerated water (https://en.wikipedia.org/wiki/Aerated water) "Aerated water is, correctly speaking, water to which air is added". "The term is, however, frequently applied to carbonated water". Mineral water: Mineral water (https://dictionary.cambridae.org/dictionary/enqlish/mineral-water) "natural water from underground, containing dissolved minerals that are believed to be good for your health" Purified Water: Purify - Dictionary meaning (http://www.dictionary.com/browse/Purify) "to make pure; free from anything that debases, pollutes, adulterates, or contaminates" "to free from foreign, extraneous, or objectionable elements" PurifiedWater(https://encyclopedia.thefreedictionary.com/purified+water) "Purified water is water that has been mechanically filtered or processed to remove impurities and make it suitable for use Purified water in colloquial English can also refer to water which has been treated ("rendered potable") to neutralize, but not necessarily remove contaminants considered harmful to humans or animals." Distilled water....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emble 'purified water'. It may be said that as the water generated from the STP Plant is purified or treated water to make it suitable for industrial use, the same is to be excluded from the exemption notification. 2.8.5 It is here-in submitted that all the other categories of water as mentioned in the exclusion clause have some special characteristics and specialised uses such as they are use in aerated drinks, medicinal/health uses, automotive cooling system, sterilisation, Laboratory application, Car battery, etc, However, as the term 'purified' has not been defined, it is not clear whether the process carried out by the Applicant to convert sewage water into water fit for industrial consumption can be said to be covered under 'purified water'. 2.8.6 In the case of the Applicant, the process essentially involved is removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and gases from sewage water. The goal is to produce water fit for being used in the factory of RCF as well as if available in surplus then the same shall be also sold for usage as an Industrial Input. The process carried out on raw sewage water in the STP, mak....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Courts below for this purpose." As submitted above, the intention of the usage of the word 'purified' seems to indicate purification for some specialized purpose. The Applicant is using sewage water and is carrying out certain processes such that the water can be used for industrial purposes. There are no processes carried out on naturally available water by the Applicant and such water is also not used specifically for certain specialized purposes. The water can be used by the Applicant or it can also be sold to any other industry which uses water as an Industrial input. Thus, ideally such water should not be covered under the exclusion clause of Entry 99 and may be said to be exempt. However, as discussed above, owing to the lack of clarity in understanding the term 'purified' in the exclusion clause, the Applicant is hereby filing this Advance Ruling to understand whether the Water generated and supplied by the Applicant from the STP plant can be said to be covered under the main entry 'Water' of SI. No. 99 or would be covered under 'Purified' and hence covered under the exclusion part of the exemption notification. 3. Treated water supplied by RCF is not sold in sealed co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated water The following are excluded: - The above water should not contain added sugar or other sweetening matter and - The water should be other than drinking water packed in 20 litres bottles 4.2 Basis the above, it is seen that mineral water and aerated water which were covered under the exclusions as per Si. No. 99 of the exemption notification have been specifically included in SI. No. 24 and chargeable to 18% rate of GST. 4.3 Further, this entry at SI. No. 24 has mentioned the words 'Waters, including..' which essentially means that all kinds of water apart from the one that is specifically excluded i.e. water containing sugar / sweetened matter and water packed in 20 litres bottles, rest all kinds of water should be included in this entry. 4.4. In this regard, it would be worthwhile to understand the meaning of the term 'including' and that by usage of the words 'including, the law draftsmen have intended to widen the scope of the words preceding it. Reliance in this regard is placed on the decision of The Supreme Court in the case of Krishi Utpadan Mandl Samiti vs. Shankar Industries, (1993) Supp (3) SCC 361(1) wherein it was held tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s fit, proper and reasonable, on the facts of the case, may be granted. APPLICANT SUBMISSION DATED 03.08.2021:- A. Description in brief: Rashtriya Chemicals and Fertilizers Limited ("Applicant") is engaged in business of manufacture and sale of fertilizers and industrial chemicals to customers. The Applicant has set up a Sewage Treatment Plant ('STP') with an objective of becoming self-dependent in meeting daily process water requirements of Trombay unit. In sewage treatment process, sewage water is treated through various processes to make it suitable for industrial use. The surplus water from the STP is being supplied to Bharat Petroleum Corporation Limited ('BPCL') through a pipeline. B. Question(s) On which advance ruling is required: RCF has sought Advance Ruling on the applicable rate of GST on supply of the sewage treated water to BPCL under the following entry: Exemption Notification no. 2/2017-Integrated Tax (Rate) dated 28 June 2017: Entry HSN Description of goods GST Rate 99 2201 Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] Exempt (NIL ra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of these taxes) as well as embedded taxes and the incidence of CST, Octroi, Entry Tax, etc. [http://www.gstcouncil.gov.in/14th-gst-council-meeting] In view of the above, under the erstwhile Central Excise Tariff Act, manufacture and sale of water not sold in sealed containers was exempt from Central Excise Duty as stated below: General Exemption No.50: Sr.No. Chapter Descriptions of excisable goods Rate Condition No. 39 22019090 Waters not cleared in sealed containers Nil - Further, as per the Maharashtra VAT Act, 2002, Water' was covered under Schedule A which is for NIL rated goods. Thus, even in MVAT regime, there was no VAT on sale of 'treated water' in the State of Maharashtra. The relevant entry is reproduced below: Schedule A- Maharashtra VAT Act, 2002: Sr.No. Name of the commodity Conditions and exceptions Rate of Tax 49 Water other than,- (a) aerated, mineral, distilled, medicinal, ionic, battery, demineralized water, and (b) Water sold in sealed container. (c) Water for injection. - 0% In view of exemption for water under excise and the MVAT law and the decision taken by the GST Council, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the intention of the Government on exempting supply of water (other than in sealed containers) from tax in erstwhile as well as GST regime. The entry should be interpreted having regard to the objective of the Government. 4. Water supplied by RCF is not 'Purified Water' as contemplated under the GST law: Purified water is water that has been processed to remove impurities like chemicals and other contaminants such as bacteria, algae, fungi, parasites, metals like copper and lead, chemical pollutants. It is worthwhile to note that water obtained from STP and sent to BPCL contains bacteria, virus etc. The Applicant has not undertaken ultraviolet treatment on such treated water for removing the bacteria, virus and E. coll. Therefore, water obtained from STP cannot be construed to be purified water as the same still contains impurities. Further, in the case of Commissioner of C.Ex. Jamshedpur vs. Kamani Foods [1999 (114) ELT 644 (Tribunal)], the Hon'ble Calcutta Tribunal in respect of matter related to classification of the product 'Treated Pure Water' held that the treated pure water is not excisable as no mineral salts are added in the treated water. 5. Wikipedia post ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by M/s RCF Ltd. to BPCL. The said water has been manually referred by both the companies as Treated Water. Therefore, M/S RCF Ltd. has preferred an application for Advance Ruling under Section 97 of Central Goods and Services Tax Act, 2017 (hereinafter referred to as "CGST Act and Maharashtra Goods and Services Tax Act, 2017 (hereinafter referred to as "SGST Act") on the question of law relating to applicable rate of GST on supply of the treated water to BPCL as to: Whether Treated Waters obtained from ST) (classified under Chapter 2201) will be eligible for exemption from GST by virtue of SI.No: 99 of the Exemption Notification No. 02/2017 - Integrated Tax (Rate) dated 28.06.2017 (as amended as "Water (other than aerated, mineral, purified, distilled, medical, tonic, battery, de mineralized and water sold in sealed container") (1) Whether Treated Water" obtained from STP (Classified under Chapter 2201) is taxable at 18% by virtue of SI.No.24 of Schedule-Ill of Notification No.01/2017-Integrarted Tax (Rate) dated 28.06.2017 (as amended) as "Water, including natural or artificial mineral waters and aerated water, not containing added sugar or other sweetening matter nor fl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eening, grit removing, nutrient removing, aeration, Reverse Osmosis on the sewage water. This amounts to treating water and purifying it. Hence department contends that "Treated Water" obtained from STP (classifiable under Chapter 2201) will not be eligible for exemption from GST by virtue of SI. No. 99 of the Exemption Notification No. 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended) as "water (other than aerated, mineral, purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container" And "Treated Water" obtained from STP (classifiable under Chapter 2201) is taxable at 18% by virtue of SI No, 24 of Schedule- Ill of Notification No. 01/2017 - Integrated Tax (Rate) dated 28th June 2017 (as amended) as & quote; Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 litres bottles)". 04. HEARING 4.1 Preliminary hearing in the matter was held on 07.01.2020. Shri. Santosh Sonar, learned CA appeared, and requested for admission of the application. Jurisdictional Officer Shri. Rajeev Kadam, Superintenden....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vered under Entry 99 of the Exemption Notification No. 02/2017 (supra). Further, if such water cannot be said to be exempt, then can the same be said to attract GST @18% as per SI. No. 24 of Notification 01/2017-IGST (supra). 5.4, The applicant has submitted that the process carried out it involves converting the sewage water into treated water of an agreed quality to make it suitable for industrial use but does not involve addition of any minerals to the water to make it fit for drinking purposes. The comparative details (presented by the Applicant) of the waters showing the comparison between the water generated from sewage and the normal drinking water (not mineral water) is submitted in Para 5 of Annexure II. From the perusal of the comparison, it can be seen that the processes through which the sewage water is subjected to, certainly purifies the sewage water and makes it suitable for the industrial use but the same does not contain the essential characteristics to make it fit for drinking. 5.5 It is contended by the applicant that such treated water generated from the STP Plant and used in the factory by either RCF or by BPCL is squarely covered under the term 'Water' a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p or Service Code(Tariff) Description of Services Rate (%) Condition (1) (2) (3) (4) (5) 99 2201 Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] Nil Nil 5.8.2 The aforesaid entry at Sr. No. 99 reveals that it covers "water" other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container. The said entry and HSN speaks about only "water" whereas other category of waters mentioned therein including purified water, are not provided exemption from tax. The said entry therefore covers simple and natural type of water and further it does not contain water which has been subject to processes like purification or treated etc. 5.8.3 It is observed that the applicant has processed the sewage water which contains various kinds of organic and inorganic impurities like sand, silt, day, chemicals, organisms, etc. It is found from the processes undertaken by the applicant that it essentially involves removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the said Entry 24 of Schedule Ill of Notification No. 1/2017 which relates to "Waters" that it is amended vide Notifications No. 06/2018- Central Tax (Rate), dt. 25-01-2018. New entry relating to water is inserted vide the said amended Notification (at Sr. No. 46B of Schedule II of the Notification). Effect of all above mentioned notifications, with effect from 29.02.2018, 's reproduced as under: Schedule No. Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate Condition (1) (2) (3) (4) (5) (6) Schedule II 6% 46B 2201 Drinking water packed in 20 litres bottles 6 Nil Schedule III 9% 24 2201 Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured other than Drinking water packed in 20 litres bottles 9 Nil 5.10.2 On perusal of the above notification entries, it is found that, "Drinking water packed in 20 litres bottles" are liable to tax 12% and the "Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ural form and further specifically mentions inclusion of different type of waters which are to be covered under the said Sr. No. 24. Thus, it is clear that different type of waters are covered in Entry No. 24, prescribed as "waters" and the same excludes the entries of 'water' covered under Sr.No. 99 of Notification No. 02/2017-C.T. (R) dated 28.06.2017 and Entry 46B of Schedule II of Notification No. 01/2017-C.T. (Rate) dated 29.2.2018. The words mentioned in the statute and notification under GST Act is to be read strictly to allow any exemption of taxes. 5.10 Applicant has submitted that Circular No. 52/26/2018 dated 09.08.2018 at Paragraph Number 6 clarifies that "Accordingly, supply of water, other than those excluded from S. No. 99 of Notification No. 2/2017 (supra) would attract GST at "NIL" rate. Therefore, it is clarified that supply of drinking water for public purposes, if it is not supplied in sealed container, is exempt from GST." Accordingly, it can be said that the Exemption Entry also applies to sewage treated water which is not cleared in sealed containers i.e. the same is nothing but treated water cleared through pipelines. On the perusal of the clarificatio....