TaxTMI 
TaxTMI 
2024 (1) TMI 1200
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.... resultant treated water is to be sold to the dyeing units. 2.1 The Applicant has sought for advance ruling on the following questions; (1) What is the appropriate classification of the treated water that would be sold by the Applicant, after carrying out various treatment process on the effluent water purchased by them? (2) What is the rate of GST applicable on the said treated water which would be sold by the Applicant? 2.2 The Applicant has submitted the copy of application in Form GST ARA-01 and also submitted a copy of challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules, 2017 and SGST Rules, 2017. 2.3 The Applicant has been established as a Zero Liquid Discharge (ZLD) plant, undertaking treatment of dyeing and bleaching effluents discharged/received from their member dyeing units, so as to completely prevent discharge of any effluent into the nearby water bodies. 2.4 As per the written submissions made, their main objective is to treat the effluents generated from all its member units. The effluent water is received from the member Dyeing units through pipelines and the effluent is subjec....
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....duction, the effluent pH is corrected and distributed to member units for reuse. 3. The Applicant's interpretation of law/facts in respect of the questions raised, they submitted the following : • The CGST payable on supply of various goods are prescribed under Notification No. 1/2017-C.T. (Rate), dated 28-6-2017, as amended, and Notification No. 2/2017-C.T. (Rate), dated 28-6-2017, as amended, provides for various exemptions from payment of CGST, for various supplies of goods. • As per the First Schedule to the Customs Tariff Act, 1975, Chapter 2201 covers "Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured; ice and snow", and thus the heading is wide enough to cover the treated water and therefore the treated water would be classifiable under Heading 2201. • Sl. No. 99 of the Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 provides exemption from payment of CGST for the following description of water : 99. 2201 Water other than aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized and water sold in sealed con....
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.... 1460 4 Magnesium mg/1 80 1 980 5 Sodium mg/1 4600 140 50100 6 Chloride mg/1 3500 140 30500 7 Sulphate 4000 110 61000 8 Bicarbonate 400 20 1800 • The process of treatment of the effluent water received would be converted into purified/demineralized water as all impurities are removed and various salts and ions present in the effluent are removed in the process of treatment. Therefore, the treated water recovered is demineralized water, which is classifiable under MSN 2201 and is liable for GST rate of 18% under Sl. No. 24 of Schedule III of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and the benefit of exemption from payment, of GST as per Sl. No. 99 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017, cannot be claimed by them. 3.1 They relied upon the decision of TN AAR in the case of M/s. Kasipalayam Common Effluent Treatment Plant Private Limited (AAR Tamilnadu -23/AAR/2021) [2021 (54) G.S.T.L. 348 (A.A.R. - GST - T.N.) = [2021] 130 taxmann.com 72/87 GST 490 (AAR - Tamilnadu)], in a similar case, wherein it was pronounced that, Water recovered, which is demineralized water fo....
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....ons & findings 6.1 We have carefully examined the statement of facts, supporting documents filed by the Applicant along with application, submissions/Additional submissions made and the comments of the Central/State Jurisdictional Authority. 6.2 The Applicant is a common effluent treatment plant engaged in rendering hazardous waste treatment and disposal services. The treated water and salt recovered during the treatment/process are being supplied to member units for their reuse. So far, they have paid tax @ 12% classifying their services under the group 99943 water treatment and disposal services. 6.3 In order to prevent pollution of River water and ground water, TNPCB has made the Zero Liquid Discharge system (ZLD in short) mandatory for all the highly polluting industries including Textile Dyeing and Bleaching industries, Tanneries etc., which use considerable amount of salt in the process and consume huge quantity of water. The ZLD system ensures recovery of water & salt from the effluent water, thus preventing pollution of River/groundwater. 6.4 In this context, the Applicant is functioning as a common plant to treat the effluents generated in the member textile dy....
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.... Advance Ruling pronounced by the Gujarat Authority for Advance Ruling is also related to purification of raw water through RO and UV technologies and selling purified water in containers. Therefore, both these rulings are not relevant to the case of the Applicant. Further, these rulings were issued prior to the issue of Circular No. 179/11/2022, dated 3-8-2022. In the case of M/s. Kasipalayam Common Effluent Treatment Plant Private Limited, it was pronounced that, Water recovered out of effluent treatment process, is partly demineralized in nature for industrial use and therefore is classifiable under Heading No. 2201 as Waters described under Sl. No. 24 of Annexure-III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 taxable at the rate of 18 per cent GST. 6.10 Water recovered has been categorized as demineralized/purified water in aforesaid rulings, classifiable under Heading No. 2201 under the following entry in Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017. To decide upon the taxability of effluent treated water, it is required to analyze the aforesaid classification. The entry given under the said notification is as under : Sl. No. H....
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....e), dated 28-6-2017. 6.12 It is the claim of the Applicant that the treated water will not fall under the said entry Sl. No. 99 in Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017 as it is demineralized water. As per the Customs Tariff Act, demineralized water has been grouped in Chapter 28 under the Heading 28.53 - Distilled and conductivity water and water of similar purity. As per explanatory notes, this heading covers only distilled water, redistilled water or electro osmotic water, conductivity water and water of similar purity, including water treated with ion exchange media, which have got special usages. 6.13 As per the standard Chemistry references, demineralized water is explained as detailed below; Demineralized water has all its mineral content almost removed. The most common DM water processes are : (1) Deionisation (2) Distillation (3) Electro dialysis (4) Filtration using membranes (Nano filtration or reverse osmosis) Demineralized water is obtained by passing water successively through a cation exchange ( in....
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....out of the effluent treatment process nothing but an ordinary water which is suitable for reuse by the dyeing and bleaching units as a solvent and as a washing, rinsing medium. Thus, it aptly fits into Sl. No. 99 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 under the Heading 2201 rather than Sl. No. 24 of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 under the same Heading 2201. 6.18 As per Circular No. 179/11/2022, dated 3-8-2022, issued by Ministry of Finance, regarding applicability of GST on various goods and services, it has been clarified that treated sewage water attracts Nil rate of tax. The relevant portion of the Circular stated supra, is as under : "5. Treated sewage water attracts Nil rate of GST : 5.1 Representations have been received seeking clarification regarding the applicable GST rate on treated sewage water. Treated sewage water was not meant to be construed as falling under "purified" water for the purpose of levy of GST. 5.2 In general, Water, falling under heading 2201, with certain specified exclusions, is exempt from GST vide entry at Sl. No. 99 of Notification No. 2/2017-Central Tax (Rate), dated the 2....