Is Purified Drinking water supplied at affordable price taxable @ 18%

In Re: M/S. Vijayavahini Charitable Foundation [AAR No. 14 /AP/GST/2021 decided on March 20, 2021] wherein M/S. Vijayavahini Charitable Foundation (“the Applicant”) has proposed to undertake the activity of providing pure and safe drinking water at an affordable cost for the under privileged people in villages in the state of Andhra Pradesh where clean and potable drinking water is not available by treating open well/ borewell/ ground water through reverse osmosis (“RO”) process.

Application for advance ruling was filed to determine whether supply of drinking water to general public in unpacked/unsealed manner through dispensers/mobile tankers by a charitable organization at a concessional value is covered under exemption of GST as per SI. No 99 of the Notification 02/2017-Central tax (Rate) dated June 28, 2017 (“Goods Exemption Notification”)

The AAR, Andhra Pradesh rejected the Applicant’s contention citing the Circular No.52/26/2018-GST dated August 09, 2018 (“Circular No. 52”) which states “6.3 Accordingly, supply of water, other than those excluded from S. 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.”

And, Held that purified water is excluded from Sl. No. 99 of the Goods Exemption Notification and therefore it is taxable @ 18% under Sl. No. 24 of the Notification 01/2017-Central tax (Rate) dated June 28, 2017 (“Goods Rate Notification”).

Our Comments:

The term ‘purified’ has not been defined under the GST Law. What is the meaning of purification treatment and sold in unsealed containers is very subjective point. Thus, a clarification should be provided by the Government on GST rate on purified water being necessity for every human being and levying 18% GST on same is unwarranted.

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.