TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 358
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....or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as an Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s Mannarai Common Effluent Treatment Plant Private Limited, No. 209/2A, S. Periyapalayam Post, Uthukuli Road, Tiruppur - 641605 (hereinafter called as the 'Applicant') is registered under the GST Act with GSTIN: 33AACCM4445J1ZJ. 2. The applicant had filed an appeal before the Tamil Nadu Appellate Authority for Advance Ruling (hereinafter referred as AAAR), against the order No. 20/AAR/2023 dated 19.06.2023, passed by the Tamil Nadu State Authority for Advance Ruling (hereinafter referred to as AAR), in respect of the Application for Advance Ruling filed by the Applicant. In their appeal, the appellant stated that they are an effluent trea....
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....astructure Limited (AAR Gujarat GUJ/GAAR/R/2002/48) and M/s Kasipalayam Common Effluent Treatment Plant Private Limited (AAR Tamil Nadu 23/AAR/2021) wherein it has been held that demineralized water for industrial use is classifiable as water taxed at 18%. 6. Further, the applicant furnished the following documents before the AAAR, which were not earlier available to the AAR while deciding the matter, viz.,- (i) Test report No. V2300446A dated 12.10.2023 of the South India Textile Research Association Laboratory (in short SITRA) (ii) Consent Order No. 2308150947958 dated 24.03.2023 of Tamil Nadu Pollution Control Board, for renewal of consent for the operation of tire plant and discharge of sewage and/or trade effluent under Section 25 of the Water (Prevention and control of pollution) Act 1974, as amended in 1988. (iii) Process Explanation furnished by the appellant,., etc., 7. Based on the above contentions and documents produced, the appellant prayed before the AAAR to pass orders to set aside/modify the impugned order under appeal and pass such other orders, as deemed fit. After hearing the applicant the AAAR are of the view that the issue in the instant case requires a....
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....hemicals, salts etc., and the total dissolved solids is 7932 mg/1. 9.2. The effluent is subject to extensive processing at the treatment plant which includes equalization, biological aeration, nitrification, de-nitrification, biological degradation, secondary clarifier, oxidation reduction, filtration and evaporation. 9.3. The intention of the processing is to achieve zero liquid discharge as mandated by the Hon'ble Madras High Court and to make the resulting products fully reusable in the dyeing industries. The outputs of the processing and the mode of disposal / usage as per the consent order of Tamil Nadu Pollution Control Board are as follows:- Description of outlet Point of disposal Sewage Industry's own land Trade effluent I (RO Permeate, MEE Condensate) Distributed to member units for reuse Trade effluent II (Brine solution, Recovered Salt) Distributed to member units for reuse Trade effluent III (Sale Residue) ATFD 9.4. That they had applied for Advance Ruling including the query regarding the correct classification of RO Permeate, MEE condensate (Trade effluent I); that at the time of filing the application, they had applied under the name "Wa....
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....es. But the RO Permeate can only be discharged for reuse in dyeing units and cannot be used for irrigation or discharged into water bodies. Hence the exemption given to treated sewage water under the heading 2201 is not applicable to the RO permeate. This has been upheld by Gujarat AAR in case of Palsano Enviro while holding, "This clearly shows the intention of the legislature that any type of water which are being sold in terms of commercial purpose have been kept out of the purview of exemption as provided under entry No. 99 of the Notification." d) Therefore, the RO permeate, do not get covered under the Chapter 22, "Beverages, Spirits, Vinegars", and that the same is classifiable under either of the following headings, viz., 2853 00 99 - Other Inorganic Compounds Since the RO permeate which is not fit for human consumption does not have the characteristic of water covered under 2201, it is classifiable under this residuary head. Comparable products like distilled water, conductivity water are grouped here. 2201 - Demineralised water Without prejudice to the above, if in the opinion of authority, it is classifiable as w....
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....oods is correct? 2. Whether classification of water sold as "Water including natural or artificial mineral waters and aerated waters, not containing added sugar or sweetening matter, not flavored (other than drinking water packed in 20 litre bottles) under heading 2201, is correct? 11. Discussion on Classification as to whether Supply of Outputs as sale of Goods is Correct? 11.1. In the statement of relevant facts filed by the Applicant, they have stated that they purchase the effluents from the member units and the Applicant becomes the owner of the effluent. After processing of the effluent, the applicant sells the resulting products to any of the member units based on the market price and as per the requirements of the member units. The Applicant has contract with member units for minimum quantity of effluent to be supplied and may charge a fee if the said quantity is not achieved. Also, as per the Consent Orders of the Tamil Nadu pollution Control Board, the CETP shall be allowed to generate from its participating 18 member units to the capacity of 90% of 4165 KLD of DPR quantity (i.e 3748.5 KLD) with the existing ZLD system. 11.2. In so far as the first question viz Class....
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....on and judgement cited are present. If that is the case, then the classification of supply of treated water, salt and other products, as sale of goods is correct. However, it is emphasized that the mode of operation intended by the applicant i.e. purchase of raw effluent, treating the same and selling the resultant products, can be classified as sale of goods, if and only if, the applicant follows the procedures envisaged in the Sale of Goods Act and rationale of the observations of Hon'ble Supreme Court. If such is the case, the proposed mode of purchase of raw effluent, treat it on own account and supply of output, can be treated as 'sale of goods' and consequently the first question is answered in the affirmative. 12. Classification, of Treated Water: 12.1 As far as the second question i.e., the "classification of Treated water" sold by the applicant is concerned, the Applicant stated that the Advance Ruling authority passed the order grouping the product as Water [other than aerated, mineral, distilled, medicinal, ionic, battery, demineralized and water sold in sealed container] under heading 2201 with 'NIL' rate of tax and they contended that the classifi....
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....ding Phosphate, Fluoride, Nitrate, Iron, Silica are reduced to non-deductible or very negligible levels. This view has been followed in Hojwala Infrastructure Limited (AAR Gujarat), Palsano Enviro Protection Limited (AAR Gujarat) and Kasipalayam Common Effluent Treatment Private Limited (AAR TamilNadu), by which the product in question falls under SI.No 24 of Schedule-III of Notification No 1/2017-CT(Rate) dated 28.06.2017. 12.5. In view of the above contentions of the applicant, it is imperative to examine the case, as to whether the R.O permeate is to be treated on par with the treated sewage water and qualify for the Nil rate of tax? (or) As to whether the R.O permeate falls under the heading 2853 00 99 - Other Inorganic Compounds and classifiable under this residuary head, comparable products like distilled water, conductivity water (or) As to whether the R.O permeate is classifiable as waters under the head 2201, as Demineralised water'? 12.6. Before going in to the issue on hand, it becomes necessary to analyse techniques involved for de-mineralisation, characteristics of De-mineralised water, distilled water and conductivity water. It is well known that as a univer....
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....ns of R.O unit adopted and the quality of input water to be purified. 13. Whether the R.O. permeate is to be treated on par with the treated sewage water and qualify for the Nil rate of tax? 13.1 As per Circular No. 179/11/2022, dated 03.08.2022, 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 SI. 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 abo....
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....T(Rate) providing Nil GST rate reads as -"Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized and water sold in sealed container]". 2. Advance Ruling Authority, Maharashtra, in two separate instances has ruled that these goods are covered under S. No. 24 of Schedule III, attracting 18% GST. 3. As per these Rulings, the issue is whether the word 'purified' in S. No. 99 covers 'treated sewage water' as well, as a result of which the said goods will be excluded from exemption and covered under 18% GST. 4. It is clear from these entries that premium; commercial water products were to be taxed, whilst regular water such as municipal supply, etc is to be at Nil GST rate. Presence of word 'purified' in exclusion to exemption has caused confusion in this case. 5. Fitment Committee examined the issue and recommends that the word 'purified' may be omitted from the exception under S. No. 99, thereby making it clear that sewage treated water attracts Nil rate of GST. 13.5 Whereas the effluent of the textile industries in question involves contamination of water by hazardous toxic waste, Organic chemicals from d....
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....d solids and turbidity, colour from the effluent water, as follows: Sl.No. Parameter Quantity present in Raw Effluent Quantity present in Treated water 1 Colour as Hazen 176 1 2 Total Suspended solids 168 mg/L 4 mg/L 3 pH 7.42 5.88 4 Phenolphthalein alkalinity 30 mg/L 0 mg/L 5 Turbidity 181 1 6 Phosphate as PO4 15.1 mg/L 0.1 mg/L 7 Fluoride as F- 0.62 mg/L ND (Lo D:0.01) 8 Nitrate-N 3.1 mg/L 0.4 mg/L 9 Iron as Fe 0.86 mg/L 0.02 mg/L 10 Silica as Si 02 28 mg/L ND(LoD) 11 Total Dissolved salts 7932 mg/L 148 mg/L 13.7 From the above analysis of the test report issued by SITRA Laboratory, it is observed that the total dissolved salts or constituent chemicals/ minerals which was originally present in the raw effluent water have been substantially reduced to meagre quantity or non-detectable limit. In other words, the effluent water is demineralized to certain extent by three step Reverse Osmosis Units, leaving behind certain quantity of minute mineral/salts. It is noted from the statement of facts furnished by the Applicant that retention of meagre quantity of chemicals is with the intention of making the Permeate fit for usage in the dye....
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....as High Court and to make the resulting products fully reusable in the dyeing industries whereby the dissolved solids are reduced from 7932 mg/L to 148 mg/L. 14.2. We are the view that if the technique/process employed in the CETP of the Applicant is meant to yield the output water comprising of Total dissolved solids of zero mg/L or minuscule quantity of dissolved salts, then the resultant treated water would be equated with distilled water or conductivity water and water of similar purity and would be classified under the heading 2853 90 10. 14.3. But, as observed from the analytical test report issued by the SITRA laboratory, dated 12.10.2023, with reference to the samples submitted by the Applicant for testing to the SITRA Laboratory, vide reference No 28.09.2023, as well as from the test recordings in respect of characteristics of effluent at various stages of treatment, from their internal logs maintained by the Applicant at their plant, for the period 27.09.2023 to 30.09.2023, reveals the following: As per Analytical Test Report given by SITRA, Sample submitted date Total Dissolved solids present in Raw Effluent Total Dissolved solids present in Treated water 28.09.20....
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....that the legislature doesn't intend to restrict the entry. It makes the entry enumerative but not exhaustive and the term 'water' retains its ordinary meaning and its scope will be extended to bring the de-mineralized water of the applicant's case, within its ambit. 15.4 We further observe that the following rulings that dwell on similar cases involving treated water obtained from CETP, supports the above stand, i.e., 1. In the case of M/s Hojiwla Infrastructure Limited (AAR Gujarat-GUJ/GAAR/R/2002/48), it was ruled that 'Treated Water' obtained from CETP (classifiable under Chapter 2201) is taxable at 18% by virtue of SI. No. 24 of schedule-III of Notification No. 01/2017-CT(Rate) dated 28.06.2022 (as amended). 2. In the case of Palsano Enviro (AAR Gujarat-GUJ/GAAR/R/2002/47), it was held that "It can be concluded that after undergoing out all the process treated water obtained from CETP have micro amount of dissolved minerals and chemical and virtually free from all types of toxic materials. This treated water is used in various industries viz., Pharmaceuticals, chemicals and leather industries for their manufacturing related process. Looking to the presence ....