2019 (7) TMI 809 - AAR - GST

Classification of goods - dairy machinery - whether the dairy machinery works is liable to tax at 12% (HSN 8434) or (HSN 8413)? - HELD THAT - The Jurisdictional Authority has remarked that the goods are classified under CTH 8434 attracting 12% GST. However, the applicant has not furnished the details of the said contract, such as purchase order, Work Order etc to consider and clarify - therefore no ruling is furnished. In Diary machinery works, they have taken milk processing, Milk chilling Refrigeration system, milk handling equipment's and milk packing equipment's and milk allied product making machinery. For such supply and erection of diary machinery it involves service charges also - what will be the tax rate of service charges component? - composite supply or otherwise? - HELD THAT - In both the works, the applicant undertakes Repair/replacement services related to the Cooling Structures (Ice Bank Tanks) in the diary units of the Coop. Milk Producers Union Ltd. The materials which are to be replaced/required are also included in the work order but the amount/quote is for the entire repairing/replacement work. Thus, it is clear that the supply made is 'Composite Supply'. The applicable rate of tax is 9% GCST under Sl. No. 25(ii) of Notification No. 11/2017-C.T. (Rate) dated 28-06-2017 as amended and at 9% SGST under Sl. No. 25(ii) of Notifiation No. II (2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29-06-2017 as amended. Nature of activity - Works Contract or not - rate of tax and HSN code - details of entries to be made in monthly return GSTR1? - HELD THAT - It is seen from the work order submitted by the applicant that the work undertaken by the applicant is related to repair/replacement/installation of pipelines, alteration in the liquid separator by using necessary pipelines and fittings and also maintenance and repair services for the ice bank liquid separator in pipeline which are part of machinery used in dairy industry. The work undertaken by the applicant is not relating to any immovable property - the activity undertaken by the applicant does not fall under the category of Works contract. Details of entries to be made in monthly return GSTR1 - HELD THAT - The issue involving details of entries to be made in the monthly return are procedural and do not come under the purview of Advance Ruling as per section 97(2) of CGST Act - the question hence not answered. Applicability of e-way bill procedures for business activities - HELD THAT - The issue is procedural and do not come under the purview of Advance Ruling as per section 97(2) of CGST Act - the question hence not answered.

Summary

Issues:
1. Classification of dairy machinery for tax liability
2. Tax rate on service charges in dairy machinery works
3. Determination of works contract nature and tax rate
4. Applicability of E-way bill procedures and transport documents

Classification of Dairy Machinery:
The applicant sought clarification on the tax liability of their dairy machinery works. The Advance Ruling Authority noted that the work undertaken by the applicant involved repair, replacement, and installation of machinery components in the dairy industry, which did not relate to immovable property. Consequently, the activity did not fall under the category of works contract. The ruling stated that the applicable classification of the dairy machinery could not be determined due to the lack of specific details regarding the supply.

Tax Rate on Service Charges:
Regarding the service charges in dairy machinery works, the ruling specified that the activity undertaken by the applicant for specific work orders from milk producers' unions fell under SAC 998717. The applicable tax rate was determined to be 9% under both CGST and SGST, as per relevant notifications.

Works Contract Determination:
The ruling clarified that the activities of the applicant did not meet the definition of a works contract as per the relevant provisions of the CGST/TNGST Act 2017. This decision was based on the nature of the work undertaken by the applicant in the dairy machinery sector.

Applicability of E-Way Bill Procedures:
The ruling did not address the queries related to the E-way bill procedures and details to be filled in GSTR-1, stating that these aspects were beyond the scope of Advance Ruling as per Section 97 of the CGST/TNGST Act, 2017. Therefore, no specific guidance was provided on this issue in the judgment.

In conclusion, the Advance Ruling Authority clarified the tax implications and classification of activities related to dairy machinery works undertaken by the applicant. The ruling provided insights into the tax rates applicable to specific services and highlighted the distinction between works contracts and other types of activities. However, certain aspects such as E-way bill procedures were deemed outside the purview of Advance Ruling, emphasizing the limitations of the authority in addressing certain operational details.