Madras High Court Quashes ₹96 Crore GST Demand on CMWSSB

By: Admin
May 20, 2024
Categories: GST Recent News
4 Min Read

In a reprieve for the Chennai Metrowater Supply and Sewerage Board (CMWSSB), the Madras High Court has set aside an order from the Additional Commissioner of CGST demanding ₹96 crore in taxes. Justice Senthilkumar Ramamoorthy ruled that the order failed to differentiate between potable and purified water as well as the various services provided by CMWSSB. However, he directed CMWSSB to remit ₹3 crore within six weeks and instructed the CGST to issue a new order after giving CMWSSB a personal hearing within three months from receiving the ₹3 crore.

The Additional Commissioner of CGST and Central Excise had issued a notice to CMWSSB, imposing an 18% GST on its services and a penalty amounting to ₹96.1 crore. This prompted CMWSSB to challenge the order in the High Court. CMWSSB’s counsel argued that water for drinking purposes is exempt from GST and that services related to functions entrusted to a panchayat under Article 243G of the Constitution are neither a supply of goods nor services, as recommended by the GST Council.

The Senior Standing Counsel for the GST Commissionerate contended that CMWSSB not only provides water supply and sewerage services through pipelines to the public but also supplies water, including purified water, in tankers at commercial rates to businesses and large industrial units. Justice Senthilkumar noted that the GST Commissionerate did not distinguish between potable water, which is exempt from GST, and purified water, which is taxable.