Whether supply of purified water to public in empty unsealed cans is exempt under GST law

PJ/Case Law/2020-2021/3552

Water Health India Private Limited (GST AAR Karnataka) Advance Ruling No. KAR ADRG 12/2020 dated 18.03.2020
Facts-The applicant has entered into an agreement with local panchayats /municipalities to supply purified water to urban under-served people across various metro cities by installing Community Water System, which is a water treatment plant at economical price. In the process of water treatment, applicant pump the raw water from water sources like well/pond/bore well/others and collected in the raw water This raw water is then pumped to CWS for removal of suspended solids, organic matter, chlorine, obnoxious taste and smell. The purified water is further sent to Reverse Osmosis membranes to remove total dissolved solids, bacteria and pathogens and then the same is sent to purified water storage tank. This purified water is supplied to general public in unsealed containers which are brought by the public themselves. Applicant charges Rs.8/ – or such amount as is reasonable for supply of purified water in 20 litres cans.
Issue-“Whether supply of purified water to public in empty unsealed cans is exempt under GST law”
Applicant Contentions- The applicant relied upon the entry No. 99 of Notification No. 2/2017 of Central Tax (Rate) dated 28th June, 2017, by virtue of which the supply of water falling under HSN code 2201 attracts nil rate GST. The relevant extract of the said entry reproduced as under:
“Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] is exempt from GST”.
Moreover, the applicant has referred to Circular no. 52/26/2018 dated 09th August 2018 wherein, it is clarified that supply of water, other than those excluded from Sl. No. 99 of notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, would attract GST at “NIL” rate.Therefore, it is clarified that supply of drinking water for public purposes, if it is not supplied in a sealed container, is exempt from GST.”
The applicant submitted that the term ‘sold in sealed container’ runs along with the remaining terms of the notification. Further, the term ‘and’ prior to the term ‘water’ should be read in a manner that is conjunctive and in such a way that the phrase ‘in a sealed container’ is applicable for all the types of water enumerated in the entry. In this regard, the applicant relied on the following:
As per the law lexicon dictionary, the word “and” expresses the “relation of connection or addition”
In the case of Sukhnandan V. Suraj Bali, it was held that the word “and” should be understood in its natural grammatical sense to indicate a conjunctive sense and not a disjunctive sense and cannot be read as “or”.
In light of the above applicant submitted that the word “water sold in sealed container’ should be read in conjunction with word “purified, mineral, distilled etc” and it should not be read as a separate sentence/ clause.
AAR Reasoning- AAR opined that in the above said circular it is clearly mentioned that other than those excluded from the Si. No. 99 of notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, would attract GST at “NIL” rate. The following type of waters is excluded from the said notification and exigible to GST which are:
i. Aerated water
ii. Mineral water
iii. Purified water
iv. Distilled water
v. Medicinal water
vi. Ionic water
vii. Battery water
viii. De-mineralized water and
ix. Water sold in sealed container

Honourable Supreme Court in the case of S.G.Glassworks Private Limited vs Collector of Central Ex., Nagpur held that the word ‘and’ by itself may have been susceptible of giving rise to the argument that it was another condition to be satisfied in the first mould itself. But it having been used before the word ‘where’ it is disjunctive and lays down another requirement for a glassware to be produced by the used of semi-automatic process to be entitled for exemption.
Moreover, AAR applied the principle of Author Maxwell on the Interpretation of Statutes, p. 244 (Edn. 9) referred by the Honourable Allahabad High Court in the case of Sukhnandan Suraj Bali to the instant case that the word ‘and’ used before the ‘water sold in sealed container’ in the No. 99 of notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 is disjunctive nature and lays down that ‘water sold in a sealed container’ is the another type of water excluded from the said entry along with the aerated water, mineral water, purified water, distilled water, medicinal water, ionic water, battery water, de-mineralized water.
Decision-Therefore, supply of purified water whether in sealed container or unsealed container not entitled for GST exemption as the purified water excluded from the Sl. No. 99 of notification No. 2/2017-Central Tax (Rate) dated 28.06.2017. Thus supplying of purified drinking water to the general public in an unsealed container is not entitled for exempt from GST.
Prepared By CA Preksha Jain

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PJ/Case Law/2020-2021/3552

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