In re Palsana Enviro Protection Ltd (GST AAR Gujarat)
1. Whether Treated Water obtained from CETP will be eligible for exemption from GST by virtue of of the Exemption Notification?
‘Treated Water’ obtained from CETP (classifiable under Chapter 2201) is not eligible for exemption from payment of Tax by virtue of SI. No. 99 of the Exemption Notification No. 02/2017- CT (Rate) dated 28-6-2017 (as amended) and SI. No. 99 of the Exemption Notification No. 02/2017- Integrated Tax (Rate), dated 28-6-2017 (as amended).
2.Whether Treated Water obtained from CETP is taxable at 18 per cent?
‘Treated Water’ obtained from CETP (classifiable under Chapter 2201) is taxable at 18 per cent by virtue of SI. No. 24 of Schedule – III of Notification No. 01/2017-CT (Rate) (as amended) and SI. No. 24 of Schedule – III of Notification No. 01/2017- Integrated Tax (Rate), dated 28-6-2017 (as amended).
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT
BRIEF FACTS:
M/s Palsana Enviro Protection Limited (for the sake of brevity referred as ‘the applicant’), is a company promoted by cluster of textile processing industries for setting up of Common Effluent Treatment Plant (CETP) to treat and recycled the effluent for Conveyance, Treatment & Disposal of waste water generated from the industries.
2. The applicant recycled its treated water to its member units to use it in their process activities. The treated water can be used in non-potable activity. The waste water is converted into treated water by treating the waste water through various processes to make it suitable for industrial use. As the water is not purified, it is not fit for human consumption.
3. It is submitted by the applicant that as per Sr. No. 99 of Notification No. 02/2017- CT (Rate) dated 28-6-2017 (as amended), Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and -water sold in sealed container] are exempt from GST. The water obtained from CETP is not “purified water”, and is thus, eligible for exemption from GST under SI. No. 99 of Notification No. 02/2017- Integrated Tax (Rate), dated 28-6-2017
4. The applicant has submitted that the treated water is water other than aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container, the only question remain is whether the treated water can be said as purified water.
5. It is submitted by the applicant that the term “‘purified” is not defined under the CGST Act, 2017, accordingly, referred the dictionary meaning of the term “purified”.
As per the website Dictionary.com, the term “purify” means:-
1. to make pure; free from anything that debases, pollutes, adulterates, or contaminates;
2. to free from foreign, extraneous, or objectionable elements;
As per the Cambridge Dictionary, the term “purify” means:-
1. to remove bad substances from something to make it pure
5.1 Thus, as per the dictionary meaning, the term ‘purify’ means “to make pure”, or “to free from foreign, extraneous, or objectionable elements”. Accordingly, the “purified water” means such water which is free from foreign, extraneous, or objectionable elements.
6. It is submitted further that the impugned product, i.e. CETP treated water, is obtained after carrying out various processes on the waste water. By carrying out the said processes on the waste water, the waste water is made free from various impurities substances, such as suspended particles, grit, clays, pollutants like nitrogen, phosphorus, etc. However, even after carrying out the said physical and biological processes, water coming out from the CETP still not pure Water and hence cannot be termed as purified water.
7. The applicant submits that the aforesaid notion is also supported by the Tamil Nadu AAAR order in the case of M/s New Tripura Area Development Corporation Limited (ORDER-in-Appeal No. AAAR/17& 18/2021 (AR), wherein the Appellate Authority inter alia held that fin chemical terms, purified water is pure H20 and only contains Hydrogen and Oxygen and no minerals; Distilled water is the most common form of pure water”.
8. It is submitted by the applicant that the water containing anything apart from the Hydrogen and Oxygen will not be construed as pure water. It is further submitted that even potable water, which is fit for human consumption, will not be treated as pure water due to the presence of various minerals and other elements like chlorine, which are added to it to kill the harmful micro-organisms that causes diseases.
9. The applicant is of the view that on application of the legal construction of “noscitur a sociis ” or ”a doctrine or rule of construction “ to derive the meaning of the expression “purified”, which has not been defined under the GST law, it is seen that all the expressions of the exclusion clause of the relevant entry surrounding the word “purified” have got certain specific characteristics and usage. That is, this water at their respective places of their usage cannot be replaced or substituted by any other water.
10. The applicant submits that the CETP treated water supplied to its members for their industrial use, does not have any specific characteristics and usages as those of the other specific water, such as “aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container’ mentioned in the exclusion clause of the entry under consideration as the said CETP treated water can be readily replaced by municipal water.
11. The applicant submits that all these groups of specific water mentioned under the exclusion clause of the relevant entry are supplied in the packaged form, i.e., in the sealed container, in order to preserve their characteristics and specificity, while the same is not the case with the impugned product, i.e., CETP treated water, which are supplied through pipelines without any such concerns. Thus, the term “purified”, mentioned under the exemption clause of the relevant entry, will definitely not include the CETP treated water. Hence, applicant is of the view that the impugned product, i.e., CETP treated water, is rightfully eligible for exemption under entry at SI. No. 99 of the exemption Notification No. 02/2017- CT (Rate) dated 28-6-2017
12. The applicant submits that it has never been the intention of the Government, i.e., either Central Government or State Government, to levy any indirect tax on water of general purposes. Even under the erstwhile indirect tax regime, no tax, whether in the nature of Central Excise or in the nature of VAT, was leviable on the water of general purposes, hence the supply of CETP treated water was not subject to any indirect tax under the erstwhile tax regimes.
13. The applicant further submits that even under the GST regime, Government has clarified its intention of not levying GST on the supply of general-purpose water by way of issuance of the CBIC Circular No. 52/26/2018 dated 9th August 2018, wherein it has been clarified that supply of drinking water, for public purposes, if not supplied in sealed containers, is exempted from GST. Thus, by applying the canon of “purposive construction”, which gives effect to the legislative purpose/intendment, inclined to hold that the impugned product, which can aptly be construed as water of general purpose as discussed earlier, is eligible for exemption under the relevant entry at SI. No. 99 of the exemption Notification No. 02/2017- CT (Rate) dated 28-6-2017
14. The applicant vide letter dated 15-9-2022 has submitted that vide notification No. 7/2022-Central Tax (Rate) dtd. 13.07.2022, the word “purified” has been deleted from Sr. No. 99 of Not. No. 12/2017-CT (Rate) dated 28-6-2017 of exempt good list. Hence, the revised list of exempt good is as under :
