The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) ruled that no GST payable on the Supply of non-purified water.
The Appellant, New Tirupur Area Development Corporation Limited is in the business of promoting infrastructure development activities in the area of water supply at New Tirupur. They had implemented an integrated water supply project for the town of Tirupur. In order to implement the integrated water supply and sewage treatment project for Tirupur City Municipal Corporation (TCMC), wayside villages and Tirupur Local Planning Area (TLPA), a Concession agreement was signed between the Government of Tamilnadu, Tirupur Municipality (now Corporation) and the applicant to implement a 185 million litre per day (MLD) water supply project expandable upto 250 MLD and a 15 MLD Sewage Treatment plant (STP) expandable up to 30 MLD at the total project cost of Rs. 1023 crore.; By virtue of the Concession Agreement entered and the mere nature of the activity, NTADCL assumes the responsibility under Article 243 G and Article 243 W contemplated under the sixth schedule of the Constitution of India.; They had signed a water drawal agreement with TN Government for drawing raw water up to a Maximum of 185 Million Litres Per day from the river Cauvery for supply towards domestic and non-domestic purposes within the Tirupur Municipality.
The main question raised by the appellant and also the point of reference made by the members of AAR is whether the water supplied by the appellant is exempted under si. No. 99 of Notification No. 2/2017-CT(R) and its equivalent SGST notification published vide TamilNadu GO Ms. No. 63 dated 29/6/2017.
The two members consisting of M.A. Siddique and G.V. Krishna Rao held that the meaning of ‘purified water’ depends on what use of it people have in mind, like whether it is for washing, pharma use, industrial use or even to swim. In chemical terms, purified water is pure H2O and only contains Hydrogen and Oxygen and no minerals. Distilled water is the most common form of pure water. However, potable water has only one meaning, water fit for human and animal consumption and has dissolved minerals. In fact, from the performance standards spelt out in Schedule C of the agreement, the quality of potable water would itself indicate that it does not attain the nature and quality of ‘purified water’ on any count. Therefore, it can be safely concluded that the supply of the appellant is of raw water, treated to become ‘potable water’ and nothing more. Once it is distinctly clear that the supply is of ‘water’ only, and not purified water, the same falling under entry 99 of Notification No. 2/2017-CT (R) is qualified for the exemption.
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