In re Palsana Enviro Protection Limited (GST AAAR Gujarat)
Gujarat Appellate Authority for Advance Ruling (AAAR) addressed the taxability of treated water supplied by Palsana Enviro Protection Limited, a Common Effluent Treatment Plant (CETP) established by textile industries. The appellant contended that the treated water, classified under Chapter 2201, was exempt from GST under Notification No. 2/2017-CT (Rate) as amended. They argued that treated water did not qualify as purified, demineralized, or bottled water, which are explicitly taxable. The AAAR, however, upheld the earlier ruling by the Gujarat Advance Authority for Ruling (GAAR), which determined that the treated water was taxable at 18% under GST.
The AAAR found that while the treated water underwent recycling processes to remove impurities, it contained trace minerals and chemicals, qualifying it as “demineralized water” as per the notification. The authority emphasized that GST exemptions under Serial No. 99 of Notification No. 2/2017-CT (Rate) are intended for water typically consumed by the public. Since the treated water was supplied exclusively to industries for non-potable purposes, it did not fall within the exempt category. The ruling clarified that all commercial supplies of water, except drinking water, are taxable under GST.
The appellant sought to challenge this conclusion with test reports indicating the water was not demineralized. However, the AAAR rejected the report, citing procedural irregularities, such as the absence of accreditation for the laboratory and improper sampling methods. The authority further noted that additional evidence submitted during the appellate stage could not override the findings of the initial ruling.
Judicial precedents from similar cases, including rulings involving Sirupooluvapatti CETP and others, were cited to substantiate the appellant’s claims. However, these rulings did not alter the AAAR’s stance. The authority reaffirmed that the primary criterion for exemption was the intended use and chemical composition of the water, which rendered the appellant’s treated water taxable.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT
