The Tamil Nadu Advance Ruling Authority (AAR) in a recent judgment held that the purchase of raw effluent and the supply of treated output could be considered the sale of goods.
In this case, the applicant is M/s Mannarai Common Effluent Treatment Plant Private Limited, which is an effluent treatment plant, promoted by the dyeing units. The appellant planned to purchase effluent from dyeing units, process it at its facility, and sell the recovered water, salts, and other products to the member units.
Aggrieved by the order of the Tamil Nadu State Authority for Advance Ruling (AAR), the applicant approached the Appellate Authority for Advance Ruling (AAAR). According to the applicant, AAR failed to comprehend the nature of the applicant’s processing and failed to consider that minerals and hardness are removed during the processing to make the output suitable for reuse.
The applicant also contended that AAR failed to offer an opportunity for the applicant to make submissions to the materials relied on by the AAR in reaching the decision and erred in not considering the information submitted by the applicant.
One of the main issues raised by the applicant was whether it was accurate to classify the supply of output as the sale of goods. The second issue before the AAAR was whether the classification water sold under title 2201 as water, including artificial or natural mineral waters, aerated waters, and water without added sugar or sweetening agent, and without flavoring (apart from drinking water packaged in 20-liter bottles), is right.
The bench, comprising of D. Jayapriya (Additional Commissioner/ Member CGST), and M. Valli (Joint Commissioner/Member (SGST), held that, regarding the suggested method of acquiring raw effluent, handling it independently, and providing output at market rates, it is accurate to classify the output supply as a “sale of goods.”
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