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2021 (3) TMI 498 - AAR - GSTTaxability of various activities under GST - Tirupur Area Developement Corporation - charges received in respect of the various activities/supplies made by the applicant by virtue of the concession agreement entered into by them with Government of Tarnilnadu (GOTN), Tiruppur Municipal Corporation (TCMC) - Pure services or not - Sale of water - Sewage treatment charges - Consultancy Services such Detailed Project Report (DPR), Project Management Consultancy (PMC) and any other infrastructure related consultancy to TCMC / GoTN - Interest on receivable on delayed payments - Disconnection Charges - Reconnection charges - Permanent disconnection charges - Cheque Bouncing charges - Non-Revenue, Service provided to Customer on New Connection works Concept of No Loss No Gain, New Connection Shifting and other works etc. Sale of water - HELD THAT:- The applicant is not involved in the distribution of the water supply to the common public. The distribution system is transferred to TCMC and other stake holders on completion of construction as per the CA and the sale of water is to the ‘Off-take points’ at Water Distribution Systems(WDS) metered therein. Thus, this activity of treatment of water on own account and supply of water is sale simpliciter and therefore this notification which provides exemption to services do not have any application with regard to supply of water. Sewerage treatent services - HELD THAT:- In this instant the supply made by the applicant is a pure service of an activity listed as Item 6 of 12th Schedule (Article 243W) of the Constitution, i.e., an activity entrusted to a Municipality and the supply is made to TCMC, a local authority by the applicant and therefore the exemption at SI.No. 3 of the Notification No. 12/2017-C.T.(Rate) is applicable to the case at hand and we hold the applicant is eligible for the exemption in respect of the sewerage treatment services provided to TCMC. Consultancy services extended by the applicant to TCMC - HELD THAT:- On perusal of the agreement it is seen that TCMC intends to provide Water Supply and Underground sewerage schemes under the Tamilnadu Urban Flagship Investment Program(TNUFIP) and has employed the applicant as a ‘Contract Management and Supervision Consultant’. The applicant is to assist and support TCMC in contract Management and Construction Supervision of works covered under the said Water Supply and Underground Sewerage Project’ - The applicant extends ‘Pure Services of Project Management’ to TCMC in respect of this proposal and therefore the supply of the applicant is ‘Service’ eligible for exemption under SI.No. 3 of Notification No. 12/2017-C.T.(Rate) in as much as the said entry exempts any service, i.e., SAC 99 when provided to a local authority in relation to the constitutional function entrusted under Article 243W. The process for treatment of water for municipal water supply involves Pre-chlorination, disinfection, sedimentation, filtration, flocculation, electrolysis, slow sand filtration, etc and ‘Water purification’ also involves the process of removing undesirable chemicals, biological contaminants, suspended solids which are achieved by the process such as filtration, sedimentation, distillation, flocculation, slow sand filtration and chlorination. In the case at hand, the water supplied by the applicant is stated to have undergone the process of filtration, sedimentation, flocculation, distillation, slow-sand filteration and therefore, they are purified water sold to TCMC/Industrial consumers. The entry in the invoice to TCMC requiring them to add chlorine before supplying to public do not imply that the water supplied by the applicant is not purified water and only on addition Of Chlorine, the water becomes ‘Purified Water’ - the treated water supplied by the applicant is ‘Purified water’ supplied to TCMC, who as per the CA is entitled to use the same for both Domestic and Non-domestic purposes and to other designated receivers and in that account also is not exempted under Sl.No. 99 of Notification No. 02/2017-C.T.(Rate) dated 28.06.2017. Rather, the applicable rate of tax is under Sl.No. 24 of Schedule III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 attracting 9% CGST and 9% SGST. Interest receivable on delayed payments - Held that:- even when ‘Interest on Delayed Charges’ is raised against their supply to TCMC in respect of delayed payment of ‘Sewage Treatment Charges’, the exemption under Sl.No. 3 of the Notification No. 12/2017-C.T.(Rate) is not available to the applicant. Cheque Bouncing Charges - Held that:- these charges will not form a part of the Water Charges and are Miscellaneous Charges for tolerating the dishonor and again these do not merit exemption. Connection services on no profit and no loss cost recovery basis - Held that:- In as much as the activity rendered is in relation to setting of new distribution lines in the current project as per the CA, and such lines are held as their assets in their book of accounts, we agree to their contention that the incidence of provisioning of services at that instant do not arise, the activity being self-service. Connection/ Reconnection/ Disconnection/ Permanent Disconnection Charges - Held that:- it is seen that these are charges collected by the applicant from the Industrial Units in relation to Water Distribution Services’ undertaken by them for ‘Sale of Water’ to such units. Water Distribution Services are identical Services with SAC 9969 and is taxable@ 9% CGST and 9% SGST
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