TaxTMI 
TaxTMI 
2024 (4) TMI 22
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....tant 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 subjected to....
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...., 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, de-mineralized and water sold in sealed container. ....
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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 HSN 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.), in a similar case, wherein it was pronounced that, Water recovered, which is demineralized water for Industrial use is classifiable under Heading No. 2201 a....
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....atment of effluents by a Common Effluent Treatment Plant (SAC-9994). It is clearly evident that the taxpayer is only purifying the water containing the dye impurities and no change of nature of goods involved in this process. Hence, it is purely a service only. • As per the Government of India Notification No. 1/2018-Central Tax (Rate), dated 25-1-2018, it was notified that "Services by way of treatment of effluents by a Common Effluent Treatment Plant" is taxable at 6% CGST & 6% SGST in total rate of tax is 12% (SAC-9994). Hence the classification of the supply of output as sale of goods is not correct. As per the Government of India Notification No. 1/2018-Central Tax (Rate), dated 25-1-2018, it was notified that "Services by way of treatment of effluents by a Common Effluent Treatment Plant" is taxable at 6% CGST & 6% SGST in total rate of tax is 12%. But Salt (HSN 2501) and water (HSN 2201) are NIL rated. Hence, classification as sale of goods is not relevant in this case. • Moreover, most of the members dyeing units are claiming refund under inverted duty structure since dyes & chemicals are used as raw materials purchased at higher rate of tax (GST r....
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.... of River/ground water. 6.4 In this context, the Applicant is functioning as a common plant to treat the effluents generated in the member textile dyeing units during the dyeing and bleaching process recovering maximum quantity of water, salts and other solids which could be beneficially reused, leaving zero discharge at the end of the treatment process. 6.5 As per the submissions made, at present, the Applicant is rendering the service of hazardous waste treatment and disposal services, by treating the effluent water and supplying treated water and other recovered products for reuse by the member units. Now, they have proposed to purchase effluent water from the member unit and after treating the same they propose to supply the resultant products to their member units so as to classify their activities as supply of goods. 6.6 From the various submissions of the Applicant both during the personal hearing and written submissions, it is clear that the applicant seeks to purchase the raw effluent and proposes to treat the same. The applicant proposes to sell the resultant products at market rates. 6.7 The first question to be examined is 'what is the appropriate classifica....
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...., it is required to analyze the aforesaid classification. The entry given under the said notification is as under : Sl. No. Heading Description of Service Rate 24 2201 Waters including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured; Ice and snow (other than Drinking water packed in 20 litre bottles) 9% 6.11 Chapter 22 - covers Beverages, Spirits and Vinegar, covers water, non-alcoholic, alcoholic beverages. More specifically, as per explanatory notes to the Heading 2201 - Waters including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured; Ice and snow, this heading covers; (A) Ordinary natural water of all kinds (other than sea water - see Heading 25.01). Such waters remain in the heading, whether or not clarified or purified, except that distilled or conductivity water and water of similar purity are classified in Heading 28.53. The heading excludes sweetened or flavoured water (Heading 22.02) (B) ....
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....re : (1) Deionisation (2) Distillation (3) Electro dialysis (4) Filtration using membranes (Nano filtration or reverse osmosis) De-mineralized water is obtained by passing water successively through a cation exchange (in the H+ form) and an anion exchange (in the OH- form) resin and it is free from all soluble mineral salts. The pH of demineralized water is close to 7.0 indicating that, it is neither acidic nor basic as it is almost devoid of salts. The Total Dissolved Solids (TDS) value of the water depends on the amount of minerals that are dissolved in water. When minerals like calcium bicarbonate, magnesium sulphate, and sodium chloride increases then the TDS value increases. The TDS value of demineralized water should always be less than 10 mg/L (ppm) even as low as 1mg/1. TDS levels in spring or mineral waters, on the other hand, range from 50 to 300 mg/L. Demineralized water is suited to a large range of uses from pharmaceutical manufacturing to the automotive industry. 6.14 Upon going through the processes effected by the Applicant,....
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....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 28th June, 2017. 5.3 Accordingly, it is hereby clarified that supply of treated sewage water, falling under heading 2201, is exempt under GST. Further, to clarify the issue, the word 'purified' is being omitted from the abovementioned entry vide notification No. 7/2022-Central Tax (Rate), dated the 13th July, 2022. 6.19 The same analogy is applicable to the case on hand. The relevant entry in Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017 is Sl. No. Heading Description of Service Rate 99 2201 Water [other than aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] Nil 6.20 In this connection, it is observed that, all the other categories of water as mentioned in the exclusion clause have some special characteristics an....