The Gujarat Authority of Advance Ruling ( AAR ) has ruled that Goods and Service tax ( GST ) exemption is not available to Zero Liquid Discharge ( ZLD ) treated water and 18% GST is applicable.
M/s Gujarat Eco Textile Park Limited, the applicant has established a Common Effluent Treatment Plant (CETP) for the collection, treatment, and disposal of waste water (effluent) generated by industries. The applicant sought an advance ruling on the issue in respect of the classification of the ZLD-treated water (RO) obtained from the ZLD plant.
The Authority noted that water specifically is eligible for exemption from payment of GST, while other types of water, i.e., aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized, and water sold in sealed containers, are not covered under entry no. 99 and are liable to payment of applicable GST.
The AAR noted that the intention of the legislature to exempt water was that any type of water that is usually consumed or drunk by the public at large is not to be taxed. To meet such an objective, the GST Council has provided exemption under entry No. 99 of notification No. 2/2017-CT(R) to water that is free from all types of impurities and is supplied in cities and villages across the country either through a tap or tanker, a water cooler, or a water tap installed at various places across the country.
On the other hand, aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized, and water sold in sealed containers are not eligible for exemption from payment of GST under the said entry. This clearly shows the intention of the Legislature that any type of water sold for commercial purposes is kept out of the purview of exemption.
The intention of not levying GST on the supply of drinking water is clarified by CBIC vide circular No. 52/26/2018 dated August 9, 2018, which stated that the supply of drinking water for public purposes, if not supplied in sealed containers, is exempt from GST.
The AAR comprising Amit Kumar Mishra and Milind Kavatkar has observed that the water obtained from the CETP, which has further undergone the processes of ultra-filtration and reverse osmosis in the ZLD plant, has a small amount of dissolved minerals and chemicals and is virtually free from all types of toxic materials. The AAR held that the ‘treated water’ obtained after undergoing the process through CETP and the ZLD plant is classifiable under Chapter 2201 and is taxable at the rate of 18% GST.
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