TMI Blog2021 (9) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be covered under the term purification processes . The Applicant is using sewage water as an input and is carrying out certain processes on said sewage water so that the output water obtained can be used for Industrial purposes. The water is covered under Chapter heading 2201 of GST Tariff - In the subject case, the impugned water is used by the applicant for its own use i.e. in its factory and is also supplied to BPCL. The said water is obtained after the treatment to sewage water as submitted by the applicant and the said water is not potable i.e. it is not potable. The said water is never to be used for human consumption as well as never to be used as normal water. Hence in our view entry No. 46 B which pertains to drinking water only is not applicable to the impugned product. As per the applicant s submissions, it is clear that various contaminants are removed from the sewage water, thus purifying it to make it purified sewage water which is useful for Industrial purpose. As per the contention of applicant Treated Water is not potable but it can be used for Industrial use. Hence the contention of the applicant that it is to be covered under exemption entry no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container) ? or 2. Whether Treated Water obtained from STP (classifiable under Chapter 2201] is taxable at 18% by virtue of SI. No. 24 of Schedule - 111 of Notification No. 01/2017- Integrated Tax (Rate) dated 28th June 2017 (as amended) as Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 liters bottles) ? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- A. Statement of relevant facts having a bearing on the question (s) rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a receiving chamber; From receiving chamber, the said sewage is passed through screen chamber. The screen chamber has auto operated fine bar screens. These screens remove suspended particles above a particular size; After screening, sewage passes through the grit separation units where inorganic grit having higher specific gravity is removed from the sewage; De-gritted sewage then flows to Row Waste Water Channel containing Parshall flume for flow measurement; Therefore, sewage flows to second stage fine screening chamber (with 2 mm opening) to remove floating impurities 2mm from the waste water. These operations will remove floating and grit like impurities from sewage and increase the life of rotating equipment; The flow after grit separation units is led to Nutrient removal sections for removal of Nitrogen and phosphorous called pre-anoxic tank; From this stage treated sewage flows to Aeration section. The aeration tank is designed with diffused aeration system; The aerobic tank is provided for reduction of Biological Oxygen Demand ( BOO ) and Chemical Oxygen Demand ( COD ) and Ammonical nitrogen from raw sewage. The aerobic treatment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meter New STP treated water parameters MCGM drinking water 1 pH 6.8-7.2 7.1-7.3 2 Total Suspended Solids (TSS), ppm Nil 10-20 3 Total dissolved solids (TDS), ppm Max.25 80-120 4 Total Hardness as CaCO3,ppm Max.50 60-80 5 Chemical Oxygen Demand (COD), ppm Not traceable Not traceable 6 Biological oxygen Demand (BOD) ppm Not traceable Not traceable 7 Chlorides as Cl, ppm Max.15 15-30 8 Sulphates as 504, ppm Max.15 15-25 9 Silica as SiO2, ppm 1 7-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of the term applicant is given below: (c) Applicant means any person registered or desirous of obtaining registration under this Act 2. The Applicant submits that it is registered under GST law in Maharashtra having GSTIN 27AAACR2831H12K. Copy of GST registration certificate of the Applicant in the State of Maharashtra is enclosed herewith as Exhibit - 4 . Therefore, the Applicant submits that it is an eligible person to make an application for Advance Ruling. 3. Sub Section 2 of Section 97 of the CGST Act prescribes the questions, which can be raised before the Advance Ruling Authority, which specifically covers questions pertaining to applicability of notification issued under the provisions of the GST Act. An extract of the relevant clause is as follows: (2) The question on which the advance ruling is sought under this Act, shall be in respect of- (a) classification of any goods or services or both; (b) Applicability of a notification issued under the provisions of this Act; (c) (d) (e) Determination of the liability to pay tax on any goods or services or both; (f) 4. The Applicant submits that the questions of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aerated waters, not containing added sugar or other sweetening matter nor flavoured [other than Drinking water packed in 20 litres bottles] 18% The treated water obtained through the process carried out by the Applicant in the STP plant may be categorized under HSN 2201. However, the question that arises for consideration is whether the treated water can be said to be exempt and covered under Entry 99 of the Exemption Notification No. 02/2017 (supra). Further, if such water cannot be said to be exempt, then can the same be said to attract GST @18% as per SI. No. 24 of Notification 01/2017-IGST (supra). 2. Submissions to understand the scope of Entry 99 of the Exemption Notification 2.1 As per Entry 99 of the Exemption Notification, the following is exempt : All water Further, as per exclusion clause in Entry 99, the following has been excluded from the purview of exemption and hence will be liable to GST at the applicable rate: Aerated water, Mineral water, Purified water, Distilled water, Medicinal water, Ionic water, Battery water, Demineralized water and Water sold in sealed container 2.2 It is herein sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes. The comparative presented by the Applicant between the water generated from sewage and between normal drinking water (not mineral water) has been submitted in Para 5 of Annexure II. From the difference, it can be seen that the processes through which the sewage water is subjected to certainly purifies the water and make it suitable for industrial use but the same does not contain the essential characteristics to make it fit for drinking. 2.6 Thus, such treated water generated from the STP Plant and used in the factory by either RCF or by BPCL is squarely covered under the term Water as used by SI. No. 99 of the Exemption Notification. 2.7 Further, as per the Maharashtra VAT Act, 2002 (here-in-after referred to as MVAT Act, 2002 ) also, Water has been covered under Schedule A which is for NIL rated goods. Thus, even in MVAT regime, there was no VAT on sale of Water in the State of Maharashtra. Thus, as mentioned above, even as per the erstwhile excise regime and the MVAT law, the intention was not to levy excise duty or VAT on Water . Exclusion from the exemption clause: 2.8 As mentioned in Paragraph 2.1 above, certain categories of water have been ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the exciting fluid is water . (Mil.) A battery nearly on a level with the water . Demineralized Water: Demineralized water (https://envicaresystems.com/demineralization-water-treatment plants-pune.html). Demineralised Water is Water completely free ( or almost ) of dissolved minerals as a result of one of the following processes : 5.1.1 Distillation 5.1.2 Deionization 5.1.3 Membrane filtration (reverse osmosis or nanofiltration) 5.1.4 Electrodyalisis 5.1.5 Or other technologies . 2.8.2 As per the erstwhile Central Excise Tariff Act, 1985, under Chapter Heading 2201, what was covered was Water including natural or artificial mineral water and aerated water, not containing added sugar or other sweetening matter or flavoured; ice and snow . 2.8.3 As per the Explanatory Notes to the HSN published by the World Customs Organisation, the terms Mineral Water including Natural Mineral Water and Artificial Mineral Water and the term Aerated Water have been specifically explained. Further, as per the explanatory notes, it also includes Ordinary natural water of all kinds (other than sea water), whether clarified or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the source is sewage. 2.8.8 In this regard, reliance is placed on the judgment of CTO, Anti-Evasion, Circle-Il, Jaipur vs. MRF Ltd. [2009 (235) ELT 802 (Rai.)] wherein the Hon ble Rajasthan High Court has held that Words of general and wider import used in an entry surrounded by other relevant terms has to draw its colour and meaning from such surrounding words and that cannot be lost sight of. The relevant text of the judgment is reproduced here-in-below for ease of reference: The principles of ejusdem generis or noscitur a sociis are well settled principles of interpretation and the words of general and wider import used in an entry surrounded by other relevant terms has to draw its colour and meaning from such surrounding words and that cannot be lost sight of. Though this Entry No. 91 as such was not referred by any of the authorities below and discussed in detail as to whether the same would apply to the commodity in question or not but this being the only relevant entry regarding synthetic adhesives providing for 16% rate of tax and this being the only core question of law arising out of the order of the Tax Board and there being no other competing entry pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be susceptible to losing their distinguishing characteristic. For example, aerated water is necessarily required to be sold in a sealed container as it will lose the aerated nature of the same if sold otherwise. Similiarly distilled, medicinal, ionic, battery, de-mineralised and waters of like nature, are necessarily required to be sold in sealed containers as the quality/ nature of such water may get compromised due to any kind of contamination in an open container or any other manner of sale of the same. 3.3 Further Circular No. 52/26/2018 dated 09.08.2018 at Paragraph Number 6 also clarifies that Accordingly, supply of water, other than those excluded from S. No. 99 of Notification No. 2/2017 (supra) would attract GST at NIL rate. Therefore, it is clarified that supply of drinking water for public purposes, if it is not supplied in sealed container, is exempt from GST. 3.4 Accordingly, it can be said that the Exemption Entry also applies to sewage treated water which is not cleared in sealed containers i.e. the same is nothing but treated water cleared through pipelines. 4. Submissions to understand the scope of Entry 24 of Schedule III of Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der SI. No. 24 under Waters including ... and thus subject to GST at 18%. 4.6 In the instant case, the treated water generated in the STP plant of the Applicant is neither natural or artificial water nor aerated water but it may be included in first part of this entry as Water and it may be said that by specifically including aerated and mineral water the other categories of water excluded in SI. No. 99 are also intended to be included here. 4.7 Thus, in view of the above, due to lack of clarity as to whether the water supplied from the STP Plant by the Applicant is covered under the exemption notification or the same should be subject to GST at 18%. The Applicant is herein filing this Advance Ruling before your good self to provide clarity as regard to the classification of the water generated from the STP Plant and supplied for industrial use to BPCL. PRAYER IN ADVANCE RULING In view of the above facts and circumstances, the Applicant prays before the Hon ble Authority that: 1. The Applicant for advance ruling on the determination of applicable GST rate on supply of treated water be accepted/ admitted for advance ruling. 2. The Applicant be granted an Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under GST would be more or less in the similar band as the rates under the erstwhile indirect taxes (i.e. Central excise, VAT, etc.). An extract of the statement made by the Finance Minister and reported in https://www.news18.com/news/business/arun-jaitley-promises-no-surprises-in-ast-rate fixation-1386285.html is given below: We are now in final stages of fixing tariffs for different commodities. The formula under which it is being done has also been explained and therefore nobody is going to be taken by surprise, it s not going to be very significantly different (from present), he said. Fitment will be done by adding the total incidence of current taxation (central plus state levies) and then putting the goods or service in the tax bracket closest to it. And therefore all states representing different political complexions, have all agreed (on GST structure), he said Further, an Extract of the 14th GST Council Meeting held on 18th 19th May 2017 is reproduced below: Agenda Item 9: Approval of the Fitment of goods and services into the various rate slabs: 15.1. Introducing this agenda item, the Secretary stated that in the 4th Council Meeting (held on 3-4 N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, then nothing should fall under exemption entry: As you are aware, raw water obtained from ground (well/pond/bore well) and rain cannot be used in its natural form for any purpose without any minimal treatment to it. It is a general practice across the globe that water would need to be processed to the extent required for the specific end use. Basis the generic meaning of purified water, any water on which any treatment is done would amount to purified water. If that be the case, no supply of water would be eligible for such exemption as every supply would be subject to minimal treatment and would fall under the meaning of purified water and be excluded from the exemption entry. In case of the above, the intention of the Government to grant exemption for supply of water would be defeated wholly. 3. Test of purposive interpretation: We understand that objective of the law was not to levy tax on supply of water (other than aerated, mineral, distilled, medicinal, purified, ionic, battery, de-mineralized and water sold in sealed container). It is well settled principle that the law would have to be interpreted having regard to the objective it seeks to achieve. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that water obtained from STP is Purified water . However, it is a well-settled position that Wikipedia posts are not authentic and reliable. Wikipedia posts can be edited by anyone at any time, any information it contains at a particular time could be a work in progress or just wrong. Wikipedia entries are made by volunteer editors and contributors and are always subject to corrections and revisions. Further, the Hon ble Supreme Court in its judgment in Comm. of Customs, Bangalore vs. ACER India Pvt. (Citation 2007(12) SCALES 81) held that Wikipedia is an online encyclopedia and information can be entered therein by any person and as such it may not be authentic and cannot be relied upon In view of the above submissions, the Applicants pleads before the Hon ble Advance Ruling Authority to issue appropriate order clarifying on the applicable rate of GST on the supply of treated sewage water to the customer. 03. CONTENTION - AS PER THE CONCERNED OFFICER: The submissions, as reproduced verbatim, could be seen thus- The assessee engaged in the manufacture and sale of fertilizers and industrial chemicals to customers. They have its factories at Trombay and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N Description of goods GST Rate 99 2201 Water (other than aerated, mineral, purified, distilled, medicinal, tonic, batter, de-mineralized and water sold in sealed container Exempt Schedule-III - Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2019 (as mended) SI.No. HSN Description of goods GST Rate 24 2201 Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 litres bottle) 18 % PRAYER 1. According to Wikipedia Water treatment is any process that improves the quality of water to make it more acceptable for a specific end-use. The end use may be drinking , industrial water supply, irrigation, river flow maintenance, water recreation or many other uses, including being safely returned to the environment. Water treatment removes c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared, and requested for admission of the application. Jurisdictional Officer Shri. Rajeev Kadam, Superintendent also appeared. 4.2 The application was admitted. Final e-hearing was conducted on 03.08.2021. The Authorized representatives of the applicant, Shri. Santosh Sonar, CA, Shri. Pravin Jain, Senior Manager, Shri. Nagesh Chandan, Asst. Manager and Smt. Mrudula Godbole were present. The Jurisdictional officer Shri. Ashok Gamre, Superintendent, Range IV, Division I, Mumbai East was present. The Authorized representatives made oral and written submission. 4.3 Heard both sides. 05. OBSERVATIONS AND FINDINGS: 5.1 We have perused the records on file and gone through the facts of the case and the submissions made by the applicant and the department. The issue involved is limited to the rate of tax i.e. classification of the impugned product, i.e. Treated Water processed from sewage water; whether it is exempt or not and the applicable tax rate thereon under the GST ACT. 5.2 M/s RCF, the applicant engaged in the business of manufacture and sale of fertilizers and industrial chemicals to customers, has been successfully operating one Sewage Treatment Plant (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerated from the STP Plant and used in the factory by either RCF or by BPCL is squarely covered under the term Water as used by SI. No. 99 of the Exemption Notification. In addition, it is submitted that, as per the Maharashtra VAT Act, 2002 also, Water was covered under Schedule A which has NIL rate of tax. The above category of water, i.e. treated water obtained through the STP, may be said to resemble purified water . However, it is noticed that since the water generated from the STP Plant is purified or treated water which makes it is suitable for industrial use, the same is to be held as excluded from the exemption notification. 5.6 We find from the submission of the applicant that the essentially involved process is removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and gases from sewage water. The goal is to produce the water which is fit for being used in the factory of RCF, as well as, if it is available in surplus then the same shall be also sold; for usage as an industrial Input. The processes are carried out on raw sewage water in the STP, making it suitable for industrial use, may be said to be covered un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated etc. 5.8.3 It is observed that the applicant has processed the sewage water which contains various kinds of organic and inorganic impurities like sand, silt, day, chemicals, organisms, etc. It is found from the processes undertaken by the applicant that it essentially involves removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and gases from sewage water. The sewage water cannot be used, in any way, in its original form. Sewage water can be used only after it is purified and even the purified sewage water is not used for drinking purposes. It is, however, found to have industrial uses. Such sewage water is purified by applying different processes in the STP plant as mentioned by the applicant in the above written submission. Thereafter, such obtained water is called as treated water and is sold to the BPCL for the industrial use. We do not find that Applicant has used it as potable or drinking water for public use. The applicant specifically admitted this fact. 5.8.4 pe the parameters tested by the applicant, the properties of processed water generated from the sewage is different than the properties of the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Description of Services Rate Condition (1) (2) (3) (4) (5) (6) Schedule II 6% 46B 2201 Drinking water packed in 20 litres bottles 6 Nil Schedule III 9% 24 2201 Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured other than Drinking water packed in 20 litres bottles 9 Nil 5.10.2 On perusal of the above notification entries, it is found that, Drinking water packed in 20 litres bottles are liable to tax 12% and the Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured other than Drinking water packed in 20 litres bottles are taxable and liable to tax @18% GST. 5.10.3 In the subject case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, it is clear that different type of waters are covered in Entry No. 24, prescribed as waters and the same excludes the entries of water covered under Sr.No. 99 of Notification No. 02/2017-C.T. (R) dated 28.06.2017 and Entry 46B of Schedule II of Notification No. 01/2017-C.T. (Rate) dated 29.2.2018. The words mentioned in the statute and notification under GST Act is to be read strictly to allow any exemption of taxes. 5.10 Applicant has submitted that Circular No. 52/26/2018 dated 09.08.2018 at Paragraph Number 6 clarifies that Accordingly, supply of water, other than those excluded from S. No. 99 of Notification No. 2/2017 (supra) would attract GST at NIL rate. Therefore, it is clarified that supply of drinking water for public purposes, if it is not supplied in sealed container, is exempt from GST. Accordingly, it can be said that the Exemption Entry also applies to sewage treated water which is not cleared in sealed containers i.e. the same is nothing but treated water cleared through pipelines. On the perusal of the clarification, we find that it is clearly mentioned that supply of drinking water for public purposes, if it is not supplied in sealed con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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