Burden to Prove GST Exemption on Water Supply Rests with Supplier: Madras High Court in Roundwell Raja Water Vs Deputy State Tax Officer
Background of the Dispute
In Roundwell Raja Water Vs Deputy State Tax Officer, the Madras High Court examined whether a supplier claiming exemption for water supply under the Tamil Nadu Goods and Services Tax Act, 2017 must substantiate such a claim with proper evidence.
The writ petition was filed to challenge an assessment order dated 15.12.2025 issued under Section 73 of the **Tamil Nadu Goods and Services Tax Act, 2017`. The core issue was the nature of the water supplied and whether it fell under the exempt category (water supplied through tankers/lorry) or under the taxable category (packaged drinking water).
The assessee asserted that it was engaged in supplying water in containers that were transported by lorries directly to customers’ premises, and on this basis, claimed that the entire turnover was exempt from GST. The department, however, treated the supplies as taxable, treating them as “packaged drinking water”, thereby bringing them within the GST net.
Facts Placed Before the Court
Assessee’s Stand
The assessee put forward the following position:
- It was supplying water to customers using lorries and tankers.
- The water was allegedly not sold as packaged drinking water with any branding or consumer packaging typically seen in retail markets.
- On these facts, the assessee claimed that the supplies were exempt under the GST exemption entry concerning water supplied in bulk through tankers/vehicles.
The learned counsel for the petitioner stressed that the activity was limited to bulk supply of water, transported to customers through lorries, and hence, outside the ambit of GST.
Department’s Contention
The State, represented by the learned Additional Government Pleader, justified the assessment order on the following basis:
- The assessment proceeding under
Section 73concluded that the assessee was supplying packaged drinking water. - Packaged drinking water with a brand name and packaging falls within the taxable category under GST.
- The assessee did not produce adequate documents or material before the assessing authority to demonstrate that the supplies were only bulk water through lorries/tankers and not packaged drinking water.
Accordingly, the department took the view that in the absence of concrete proof, the exemption claim could not be accepted and the turnover was rightly taxed.
Legal Issue Considered
The fundamental legal question before the Madras High Court was:
When an assessee claims exemption on the ground that it is supplying only water through lorries/tankers, and not packaged drinking water, who bears the burden of proof, and what are the consequences of not discharging that burden?
Alongside, the Court also indirectly clarified the GST treatment of:
- Bulk water supply through tankers/lorries; and
- Branded, packaged drinking water.
Court’s Analysis on Nature of Water Supply
Distinction Between Exempt Bulk Water and Taxable Packaged Water
After hearing both sides, the Court recorded a clear legal position on the GST treatment of water supply: