09.01.2023: ‘Treated water’ obtained from Common Effluent Treatment Plant is not eligible for GST exemption, and would attract 18% GST: Gujarat AAR

The Gujarat Authority for Advance Ruling (AAR) in the case of M/s Palsana Enviro Protection Ltd. vide Advance Ruling No. GUJ/GAAR/R/2022/47 dated 30.12.2022, has observed that treated water obtained from the Common Effluent Treatment Plant (CETP) attracts 18% GST. 

The applicant is a company promoted by a cluster of textile processing industries for the setting up of a common effluent treatment plant (CETP) to treat and recycle the effluent for conveyance, treatment, and disposal of waste water generated from the industries. They recycled its treated water to its member units, which used it in their process activities. The treated water can be used for non-potable purposes. The waste water is converted into treated water by treating it through various processes to make it suitable for industrial use. As the water is not purified, it is not fit for human consumption.

The applicant sought an advance ruling on the issue of whether treated water obtained from CETP will be eligible for exemption from GST by virtue of the Exemption Notification. 

The applicant contended that under the GST regime, the government has clarified its intention of not levying GST on the supply of general-purpose water by way of the issuance of the CBIC Circular dated August 9, 2018. The circular clarified that the supply of drinking water for public purposes, if not supplied in sealed containers, is exempt from GST.

The AAR observed that the applicant is also a common effluent treatment plant engaged in collecting, conveying, treating, and disposing of effluents from its member dyeing and bleaching units and obtaining water by the process of reverse osmosis. The treated water is not used for drinking purposes by the public at large but is supplied to industries for their use.

The AAR held that the treated water is used in various industries, namely pharmaceuticals, chemicals, and the leather industry, for their manufacturing-related processes. The presence of small amounts of metal and water obtained after treatment by CETP is covered under “demineralized water.” Hence, the treated water obtained from CETP is not eligible for exemption.


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