HC quashes ₹96cr GST demand notice to Metrowater

Chennai, May 20, 2024

In a reprieve to the Chennai Metrowater Supply and Sewerage Board (CMWSSB), Madras high court has set aside an order of the additional commissioner of CGST demanding ₹96 crore as tax.

Holding that the order did not distinguish between potable and purified water as well as different services provided by CMWSSB, Justice Senthilkumar Ramamoorthy, however, directed CMWSSB to remit a sum of ₹3 crore within six weeks. He also instructed CGST to issue a fresh order after giving CMWSSB a personal hearing within three months from the date of reception of ₹3 crore.

The additional commissioner, CGST and Central Excise issued a notice to CMWSSB levying 18% GST for its services along with penalty to the tune of ₹96.1 crore, prompting the CMWSSB to approach the high court challenging the order. Counsel for CMWSSB cited various notifications on how water for drinking purposes is exempt from GST and that services in relation to functions entrusted to a panchayat under Article 243G of the Constitution are to be treated as neither supply of goods nor supply of services as recommended by the GST Council.

Senior standing counsel Ramesh Kutty, appearing for GST commissionerate, said CMWSSB not only provides water supply and sewerage facilities through pipelines to public but also supplies water including purified water, in tankers at commercial and dynamic rates to commercial establishments and large industrial units.

Justice Senthilkumar said GST Commissionerate did not differentiate between potable water, which is exempted from GST, from purified water, which is taxable.

[The Times of India]