The Madras High Court has nullified an order by the Additional Commissioner of Central Goods and Services Tax (CGST) demanding ₹96.10 crore from the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB).
The demand was based on the imposition of an 18% GST on the sale of purified water via tanker lorries. Justice Senthilkumar Ramamoorthy presided over the matter, responding to a writ petition filed by CMWSSB that contested the tax, interest, and penalty levied. The judge mandated that the issue be remanded for reconsideration, contingent upon the Board depositing ₹3 crore within six weeks. This deposit serves as a precondition for reopening the case on its merits.
The court’s directive ensures that the Additional Commissioner provides CMWSSB with a fair opportunity, including a personal hearing, to present their case. The adjudicating authority is required to pass fresh orders within three months from the receipt of the ₹3 crore payment. CMWSSB is allowed to submit all pertinent documents to substantiate their claim for GST exemption.
Justice Ramamoorthy highlighted that the adjudicating authority had failed to adequately differentiate between potable water and purified water in their initial decision. The court acknowledged the argument presented by CMWSSB’s counsel, R. Vijayaraghavan, that potable water adheres to BIS:10500-2012 standards, whereas purified water complies with BIS:14543:2016 norms. This distinction was crucial yet overlooked in the judge said.
Furthermore, the judge underscored the necessity to distinguish between the values of water supplied by CMWSSB through different channels. These include household and other premises via pipelines, water supplied through tanker lorries due to local shortages, and water sold at commercial rates to industrial units.
This ruling underscore the importance of nuanced understanding in tax adjudications and offers CMWSSB a renewed chance to argue their case with a clearer differentiation of the nature and standards of water supplied. The court’s decision not only provides immediate relief to CMWSSB but also sets a precedent for careful consideration of technical distinctions in GST applicability.
“Without such classification, the adjudicating authority could not have arrived at the conclusion that the principal supply is through mobile units at commercial rates… Since such conclusion was arrived at without differentiating between the services provided by the petitioner, the matter requires reconsideration,” he said.
