GST on Sewerage Water Treatment & Treated Water Supply by GVSCCL

In re Greater Visakhapatnam Smart City Corporation Limited (GST AAR Andhra Pradesh)

The Advance Ruling Authority (AAR) of Andhra Pradesh issued a ruling regarding the GST implications on the supply of treated water by Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) to Hindustan Petroleum Corporation Limited (HPCL). This case delves into whether the treated water supplied by GVSCCL falls under the purview of GST and, if so, what the applicable tax rate is.

Greater Visakhapatnam Smart City Corporation Limited (GVSCCL), a company formed under the Companies Act, 2013, is promoted equally by the state and the urban local body (Greater Visakhapatnam Municipal Corporation – GVMC). GVMC, being a local authority, provides various civic amenities, including the management of the sewage system under Article 243W of the Indian Constitution.

GVSCCL entered into agreements with Hindustan Petroleum Corporation Limited (HPCL) for the supply of recycled (treated) water. The agreements specify the quantities and sources of water, detailing both the current supply of clear water and the future supply of treated water.

Agreements Details

GVMC and HPCL executed three agreements on January 11, 2018, for the supply of bulk water:

1. Agreement No. 25 – Supply of 12 LIGD of clear water from Raiwada to Visakh Refinery.
2. Agreement No. 26 – Supply of 18 LIGD of clear water from Meghadri Gedda Reservoir to Visakh Refinery.
3. Agreement No. 27 – Supply of 15 LIGD of clear water from Thatipudi Source to Visakh Refinery and Waltair Park Housing Complex.

In total, GVMC agreed to supply 45 LIGD (20.46 MLD) of clear water. Once the project is operational, GVSCCL will replace 36.2 LIGD of clear water with treated water while continuing to supply 8.8 LIGD of clear water.

GST Implications on Treated Water

The core question raised by the applicant was regarding the GST applicability on the supply of treated water. The AAR examined whether treated water falls under the taxable category and identified the correct tax rate.