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2022 (2) TMI 1104 - AAR - GSTLevy of GST - pure services or not - supply of safe drinking water for public purpose by Chennai Water Desalination Plant Limited (CWDL) to Chennai Metropolitan Water Supply and Sewerage Board(CMWSSB) a Government Authority - applicability of SI.No.99 of Notification 02/2017 for supply of water or SI.No. 3 of Notification 12/2017?. Whether the transaction of supply of desalinated water for public purpose by the applicant to CMWSSB is Pure services as stipulated in the SI.No.3 of Notification no.12/2017? - HELD THAT:- The entry exempts pure services provided to a local authority in relation to functions entrusted to a Panchayat/Municipality under Article 243 G/ 243W of the Constitution - The applicant abstracts water from sea, treats the same in the facility owned, managed, operated, maintained by them and sells the 'treated water' to the Purchasers' and charge them for such supply. The applicant is not involved in the distribution of the water supply. to the common public and sale of water to CMWSSB is done at the 'Off-take points' at the underground storage tank of the applicant company as agreed in Schedule XVII of the BWPA therein. Invoices issued for sale of product water has been furnished. Thus in our opinion, 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. Whether the applicant is eligible to avail exemption under Entry no.99 of Notification no.2/2017 dt. 28.06.2017 read with clarification in Circular No.52/26/2018-GST dt. 09.08.2018? - HELD THAT:- The clarification in para 6 of circular no 52/26/2018-GST, dated 09.08.2018 issued from F.No. 354/255/2018 TRU states that supply of drinking water for public purpose when not sold in sealed container is exempted. The notification is unambiguous in as much as it clearly states the type of waters which is not exempted. On a joint reading of the Notification and the Clarification, the waters mentioned at sl.no. 1 to 8 and drinking water for public purpose sold in sealed container are not exempted. In the case at hand the applicant sells the water to CMWSSB after the process of desalination - the product water sold in this case is potable water and is not sold in sealed container. Hence, it is found that the desalinated water eligible to be classified under HSN-2201 attracting NIL rate of GST. The desalinated water supplied by the applicant to CMWSSB for distribution as safe drinking water is not liable to tax under the entry at Sl.no.99of Notification no.02/2017- Central Tax dated 28t.06.2017 - the activity of the applicant is not services and is only sale simpliciter i.e., sale of potable water, obtained after the process of desalination of sea water. The product water to be falling under water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] falling under HS code 2201 attracts NIL rate of GST.
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