2018 (11) TMI 447 - AAR - GST

Rate of GST - supply of pulp wood - Whether GST @5% is paid correctly on supply of pulp wood in terms of Chapter 4401? - Held that - On verification of invoices submitted by the applicant, the nature of product as described by the applicant, we are of the opinion that the contention of the applicant is to treat the de-barked Eucalyptus / Subabul pulp wood, supplying to paper mills in cut sizes under the entry number 198 of Schedule I of notification no.01 /2017 - Central Tax (Rate), dated 28.06.2017, is justified. Ruling - The supply of Eucalyptus / Subabul wood de-barked pulp wood in cut sizes, supplied to various paper mills for manufacture of pulp falls under the Entry No 198 of Schedule I of Notification No 01/201 7 - Central tax (Rate), dated 28th June 201 7, and attracts CGST @ 2.5% and SGST @ 2.5%.

Summary

Issues involved:
- Determination of correct GST rate on the supply of pulp wood under Chapter 4401.

Analysis:
The case involved an application for advance ruling by a company engaged in supplying debarked cut sizes of Eucalyptus/Subabul wood to paper mills for pulp manufacturing, seeking clarification on the correct GST rate applicable. The applicant contended that the supply falls under Entry No. 198 of Schedule I of Notification No. 01/2017 - Central Tax (Rate), attracting CGST at 2.5% and SGST at 2.5%. The applicant supported their argument by referencing a ruling from the Advance Ruling Authority of Uttar Pradesh in a similar case. The Authority examined the submissions, invoices, and the nature of the product, agreeing with the applicant's interpretation. Consequently, the ruling confirmed that the supply of debarked Eucalyptus/Subabul wood in cut sizes to paper mills for pulp manufacturing falls under Entry No. 198, attracting a GST rate of CGST @ 2.5% and SGST @ 2.5%.

The jurisdictional officer confirmed no pending proceedings or passed rulings on the issue in question, leading to a personal hearing where the applicant presented their case. The applicant highlighted the importance of the supplied wood as a raw material for paper production, emphasizing the specific process of obtaining pulp from the wood. They also pointed out the practice of state forest departments charging 5% on similar transactions. The applicant's argument was supported by invoices and references to transactions with state forest departments. The Authority considered these details in conjunction with the relevant GST notifications and rulings to arrive at a decision.

The ruling authority's analysis focused on the classification of the supplied wood under the relevant GST notification and its alignment with the applicant's interpretation. By examining the specifics of the supply, the authority verified the applicability of Entry No. 198 of Schedule I to the applicant's transactions. The ruling emphasized the correct GST treatment for the supply of debarked Eucalyptus/Subabul wood in cut sizes for pulp manufacturing, affirming the applicant's position on the applicable GST rate. The decision provided clarity on the GST rate for such transactions, ensuring compliance with the relevant tax regulations and notifications.