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TMI Blog2024 (4) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 various treatment processes to obtain reusable water with zero discharge of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. * From the above, it is seen exemption is not available to certain types of water. However, the treated water proposed to be sold would be covered by the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neralized 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 as Waters described under Sl. No. 24 of Annexure-III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 taxable at rate of 18 per cent GST. They also relied on the ruling issued by Gujarat AAR in the case of Aquaa Care (Surat) RO Technologies Pvt. Ltd. [2020 (36) G.S.T.L. 115 (A.A.R. - GST - Guj.), and ruling issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rate of 18%) and outward supply being Textile Job Work at rate of tax of 5%. As per Notification issued by C.B.I. & C. in No. 14/2022-Central tax, dated 5-7-2022, in para No. 8(d), Input services were substituted for tax payable column. Based on this notification, the member dyeing units are eligible to claim the input on invoices raised by CETP in the category of ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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'. The Applicant is of the view that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) Mineral Waters, whether natural or artificial. Natural mineral waters contain mineral salts or gases. The composition of these waters varies considerably and they are generally classified according to the chemical characteristics or their salts, e.g. : (1) Alkaline waters (2) Sulphated waters (3) Halide waters (4) Sulphuretted waters (5) Ferruginous waters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the effluent water is subjected to micro-filtration and sand filtration process to remove suspended impurities. They have then used a series of RO units for removing minerals. In spite of the RO treatment, the TDS of the treated water is higher, which can be seen from the test report. As per the report furnished by the South India Textile Research Association (SITRA) Textile Testing and Service Centre, test report No. V2300304, dated 9-8-2023 of Sample given for testing, in the case of the Applicant, it is seen that the recovered water contains chlorides, sulphates, Bicarbonates, etc. The TDS levels of the treated wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly, 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 and specialized uses such as they are used in aerated drinks, medicinal/health uses, automotive cooling system, sterilization, laboratory application, car battery etc. The treated water in the present case would not fit into any of the above mentioned in the exclusion clause. 6.21 In a similar issue, the AAAR, Maharashtra, in it its ruling MAH/AAAR/AN-RM/02/2022-23, dated 1-4-2022 in the case of M/s. Rashtriya Chemicals & Fertilizers Ltd., has held that as the water coming out from Sewage Treatment Plant still contains organic and inorganic substances, such as suspended particles, grit, clays, pollutants like nitrogen, phosphorus, etc. is not pure due to presence of the said impurities and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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