Goa AAAR Grants GST Exemption on Tanker Drinking Water Supply

The Goa Appellate Authority for Advance Ruling (AAAR) has held that supply of drinking water through tankers or in bulk quantities to students of IIT Goa is exempt from Goods and Services Tax (GST) under Entry No. 99 of Notification No. 2/2017-CT (Rate).

A Bench comprising Member Sarpreet Singh Gill and Member Mayank Kumar passed the order while deciding a reference arising out of conflicting views expressed by the Goa Authority for Advance Ruling (GAAR) on the taxability of potable water supplied through tankers.

The applicant, Shri Akhil Arun Naik, had received a work order from IIT Goa for staggered supply of potable drinking water to students. The water was sourced either from wells or from RCC storage tanks maintained by the Public Works Department (PWD), from where it was transported through tankers to IIT Goa.

The dispute before the AAAR was whether such supply would qualify for GST exemption under Entry No. 99 of Notification No. 2/2017-CT (Rate), which exempts “water” other than specified excluded categories.

The SGST Member of the GAAR had earlier held that the activity was exempt, treating the transaction as a composite supply where supply of water was the principal supply. However, the CGST Member had taken a contrary view and held that since the water supplied was chlorinated, it would fall within the category of “purified water” and therefore attract 18% GST.

“The impugned supply of potable water subjected to chlorination through water tankers to IIT Goa for students is eligible for exemption from GST as the same is covered under Sl. No. 99 of Notification No. 2/2017-CT (Rate) dated 28.06.2017 as amended.”

The Appellate Authority observed that the word “purified” had already been omitted from the exclusion clause of Entry No. 99 vide Notification No. 7/2022-CT (Rate) with effect from 18.07.2022. Since the IIT Goa tender and work order were issued after the amendment, the question of denying exemption on the ground that the water was “purified” did not survive.

The AAAR further noted that CBIC Circular No. 56/26/2018-GST dated 09.08.2018 had already clarified that supply of drinking water for public purposes, when not supplied in sealed containers, would be exempt from GST. “The drinking or potable water is not supplied in a sealed container and is clearly for public purpose.”

Therefore, the Authority held that supply of drinking water through water tankers or in bulk quantities to IIT Goa students is covered under Entry No. 99 of Notification No. 2/2017-CT (Rate) and is therefore exempt from GST.

To Read Full Order, Download PDF Given Below.