Case Title | Rashtriya Chemicals & Fertilizers Ltd vs Appelate Authority. |
Court | Bombay High Court |
Honorable Judges | Justice Ashok Kumar Mehta & Justice Rajeev Kumar Mital |
Citation | MHA/AAAR/AM-RM/02/2022-23 2022 (4) GSTPanacea 367 HC Bombay |
Judgement Date | 01-April-2022 |
Council for Petitioner | Santosh Sonar |
Council for Respondent | NA |
Section | Section 101 of the CGST Act |
In Favour of | In Favour of Assessee |
The Maharashtra Bench of Member Ashok Kumar Mehta & Member Rajeev Kumar Mital has held that water coming out from the Sewage Treatment Plant still contains various biological contaminants such as bacteria, virus, E-coli, along with other impurities. Thus, it can be safely concluded that the resultant water is not pure due to presence of the said impurities and foreign elements. STP treated water will be eligible for exemption in terms of entry at Sl. No. 99 of the Exemption Notification No. 02/2017- C.T. (Rate) dated 28-6-2017. Thus, the Appeal filed by the Appellant is, hereby, allowed.
FACTS OF THE CASE
The Appellant have a Sewage Treatment Plant (‘STP’) at its Trombay premises.
This plant uses sewage water and converts it into water for use in the factory for manufacture of the fertilizers with an objective of becoming self-dependent in meeting daily process water requirements of Trombay unit.
The Appellant have agreed to supply such treated water to Bharat Petroleum Corporation Limited (hereinafter referred to as ‘BPCL’) for use in refiner
With the above background of facts, the Appellant had preferred an application for Advance Ruling under section 97 of CGST Act, 2017 before the MAAR on the following questions of law as to – Q. Whether “Treated Water” obtained from STP [classifiable under Chapter 2201] will be eligible for exemption from GST by virtue of Sl. No. 99 of the Exemption
Notification No. 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended) having entry as “Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container]”? or Q. Whether “Treated Water” obtained from STP [classifiable under Chapter 2201] is taxable at 18% by virtue of SI. No. 24 of Schedule -III of Notification No. 01/2017-Integrated Tax (Rate) dated 28th June 2017 (as amended) as “Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured [other than Drinking water packed in 20 litres bottles]”?
In pursuance to the aforesaid application, the Maharashtra Authority for Advance Ruling has passed the order bearing number GST-ARA67/2019-20/B-57 dated 9th September 2021 (hereinafter referred to as the “Impugned Order”) wherein it has been held that “Treated Water” obtained from STP [classifiable under Chapter 2201] will not be eligible for exemption from GST by virtue of Sl. No. 99 of the Exemption Notification No. 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended) and the same will be taxable at the rate of 18% in terms of the entry at the Sl. No. 24 of the Schedule III to the Notification No. 1/2017- I.T. (Rate) dated 28-6-2017
Being aggrieved by the said impugned order, the Appellant has filed the present appeal before the Maharashtra Appellate Authority for Advance Ruling (hereinafter referred to as “the MAAAR”) on the following grounds:
Appellant contended that the impugned product, i.e., the STP Treated Water, is exempt under the GST law in terms of the provisions of entry at Sl. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28-6-2017, having description as “Water [other than aerated, mineral, purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container]”. Shri Sonar further submitted that since the water supplied by the Appellant to M/s. BPCL is suitable for industrial use only, and not for drinking purposes, the same cannot be considered as “purified water” as mentioned under the aforesaid entry at Sl. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28- 6-2017. The Appellant’s Representative also referred to the Tamil Nadu AAAR Order in the case of New Tirupur Area Development Corporation Ltd. (supra) to contend the Purified water is pure H O, and have no minerals in it. Applying the ratio of this Advance Ruling Order, he contended that since the subject water has many biological and chemical impurities and contaminants, therefore, same will not be construed as “purified water”, and will be eligible for exemption from levy of GST in terms of the entry at Sl. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28-6-2017.
COURT HELD
Considering the facts as recorded, held that STP treated water, is obtained after carrying out various physical and biological processes on the sewage water
However, even after carrying out the said physical and biological processes, water coming out from the Sewage Treatment Plant still contains various biological contaminants such as bacteria, virus, E-coli, along with other impurities. Thus, it can be safely concluded that the resultant water is not pure due to presence of the said impurities and foreign elements.
Thus, it is adequately clear that water containing anything apart from the Hydrogen and Oxygen will not be construed as pure water. It is further observed 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 diseasesunder 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 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 Circular No. 52/26/2018 dated 09 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, we are 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 Sl. No. 99 of the exemption notification no. 02/2017-C.T. (Rate) dated 28-6-2017.
We, hereby, set aside the Advance Ruling Order No. GST-ARA-67/2019-20/B-57 dated 8-9-2021 passed by the Maharashtra Advance Ruling Authority, and hold that STP treated water will be eligible for exemption in terms of entry at Sl. No. 99 of the Exemption Notification No. 02/2017- C.T. (Rate) dated 28-6-2017. Thus, the Appeal filed by the Appellant is, hereby, allowed.
ANALYSIS OF THE JUDGEMENT
Since the water supplied by the Appellant to M/s. BPCL is suitable for industrial use only, and not for drinking purposes, the same cannot be considered as “purified water” as mentioned under the aforesaid entry at Sl. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28- 6-2017.
It has been further contended that exemption is not dependent on the end-use of water as the plain reading of the entry 99 of the exemption Notification 02/2017-C.T. (Rate) dated 28-6-2017 clearly reveals that purpose for which water is being used or the end-usage of the water is not specified therein, therefore, the interpretation of the subject water vis-a-vis its industrial use in not warranted. In this regard, the Appellant have placed reliance upon the Hon’ble Supreme Court judgment in the case of Government of Kerala v. Mother Superior Adoration Convent [2021] 126 taxmann.com 68, wherein the Apex Court had held that literal formalistic interpretation of the statute was to be avoided in interpreting the beneficial exemption.
Also referred to the Tamil Nadu AAAR Order in the case of New Tirupur Area Development Corporation Ltd. (supra) to contend the Purified water is pure H O, and have no minerals in it. Applying the ratio of this Advance Ruling Order, he contended that since the subject water has many biological and chemical impurities and contaminants, therefore, same will not be construed as “purified water”, and will be eligible for exemption from levy of GST in terms of the entry at Sl. No. 99 of the Exemption Notification No. 02/2017-C.T. (Rate) dated 28-6-2017.
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