TMI Blog2024 (4) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... overed water contains chlorides, sulphates, Bicarbonates, etc. The TDS levels of the treated water as per the test report is 272 mg/1, which clearly shows the treated water is not demineralized as per the standard norms. From the above, it is clear that treated water cannot be construed as de-mineralized water. As discussed, treated water will not fit into Sl. No. 24 of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017. Also treated water is not demineralized water as claimed by them but water, without any special characters as indicated in the tariff entries. Therefore, it is amply clear that, water recovered out of the effluent treatment process nothing but an ordinary water which is suitable for reuse by the dyeing and bleaching units as a solvent and as a washing, rinsing medium. Thus, it aptly fits into Sl. No. 99 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 under the Heading 2201 rather than Sl. No. 24 of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 under the same Heading 2201. It is observed that the process carried out by the Applicant involves conversion of effluent water into treated water to make it suitable for reuse by the member units. At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any effluents. 2.5 The effluent treatment, as explained by the Applicant, is as given below : The effluent, which consists of various colours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te), 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 purified or demineralized and hence attract 9% CGST and 9% SGST for the reasons : Purified water : The term purified water is not defined in GST law. Hence taking the dictionary m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 by the Karnataka AAR in the case of Water Health India Pvt. Ltd. [2020 (35) G.S.T.L. 450 (A.A.R. - GST - Kar.) in a similar case, wherein it was held that treated water is purified water and liable to GST. 4. The Applicants were offered personal hearing, wherein Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment 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 availed on inputs and input services w.e.f. 5-7-2022. If the CETP might have considered as a manufacturer from the present classification of service provider, then the member dyeing units would claim GST refund on the input in the category of NET INPUT TAX CREDIT which would result in higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropose 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 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. 6.8 In this context, the Applicant has referred the advance rulings pronounced in the following cases. (1) M/s. Kasipalayam Common Effluent Treatment Plant Private Limited (AAR Tamilna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 Such natural mineral waters may also contain natural or added carbon dioxide. Artificial mineral waters are prepared from ordinary potable water by adding the active principles (mineral salts or gases) present in the corresponding natural waters so as to produce waters of the same properties. (C) Aerated Waters (carbonated waters), i.e. ordinary potable waters charged with carbon dioxide gas under pressure. They are often called soda waters or Seltzer waters although true Seltzer water is a natural mineral water. The heading excludes sweetened o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 water as per the test report is 272 mg/1, which clearly shows the treated water is not demineralized as per the standard norms. From the above, it is clear that treated water cannot be construed as de-mineralized water. 6.15 As already discussed, treated water will not fit into Sl. No. 24 of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017. Also treated water is not demineralized water as claimed by them but water, without any special characters as indicated in the tariff entries. 6.16 Sl. No. 99 entry in Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017, includes ordinary water and excludes all special category water and the same reads as : Sl. No. Heading Description of Service Rate 99 2201 Water [other than aerated, mineral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar 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 foreign elements and therefore will be eligible for exemption in terms of entry at Sl. No. 99 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017. 6.22 In this regard, it is observed that the process carried out by the Applicant involves conversion of effluent water into treated water to make it suitable for reuse by the member units. At the same time, the treated water cannot be put into any other usage, as the same is not completely free of impurities, bacteria and other harmful micro-organisms and chemicals. 6.23 The above facts reiterate that the ultimate intention behind the effluent treatment process is to treat the effluent water discharged by textile units to recover water, salt and other chemicals consumed during the course of dyeing and bleaching to the maximum exten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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