SC issues notice to assessee against CESTAT order holding water supply as 'sale'

SC issues notice to assessee in appeal filed by Revenue against CESTAT's order wherein it was held that supply of water to Chattisgarh State Industrial Development Corporation (CSIDC) is a sale of water, not taxable as ‘Business Support service” (BSS) u/s 65(105)(zzzq) of Finance Act, 1994; CESTAT noted that, assessee entered into agreement to own, develop, operate and maintain water supply, for which it was paid as per agreed tariff for supply of water and such rights were granted for 20 years after project construction without involvement of any third party; Noting that CSIDC has been consumer of water for payment of taxes on water supply to concerned State Department, CESTAT stated that whole scope of agreement is for supply of water; CESTAT remarked further that, supply of water by CSIDC to various industrial units is inconsequent as far as assessee is concerned, and giving a colour of service to pure sale of water is not legally tenable; Moreover, CESTAT observed that plain reading of statutory definition of BSS indicates that same is for outsourcing service and do not deal with any sale or purchase of items without reference to third party