2019 (9) TMI 692 - AAR - GST

Classification of goods - rate of GST - solar LED Torch, used generally in agriculture/ rural area - torch is having solar panel input socket, but provided without solar charging panel - Concessional rate of GST - Sr.No.234 of Schedule-I to Notification No.01/2017-CT(Rate) dtd.28.06.2017. HELD THAT - The product in question is essentially a Rechargeable LED Torch Light (as also mentioned on the packing of the product provided by the applicant). It comes equipped with an inbuilt rechargeable battery with AC adapter for recharging purpose. The product, thus, unquestionably merits classification under 85131010 of the GST Tariff. Whether the product can be brought under the ambit of Solar Powered Device in order to make it eligible for concessional rate of tax @5% in terms of Serial Number 234 of Schedule-I of Notification no.01/2017-CT(Rate) dtd.28.06.2017 and concurrent notification issued by the State Tax? - HELD THAT - The product in question i.e. Rechargeable LED Torch, though essentially and primarily rechargeable through an AC adapter, also has mechanism which can be put to use for charging through solar power. The product is provided with a socket and a 5-meter long cable for the purpose, and in some cases a solar panel is also supplied with the product. While the product is also having capability and facility of being charged through solar power, it remains a fact on record that the product is essentially and predominantly made to be charged through AC adapter. Thus, we find the argument of the applicant a bit too overstretched to call it and classify it as Solar Based Devise. In the instant case, we do not find any ambiguity in the GST legislation in as much as it clearly provides concessional rate of tax to Solar power based devices being Renewable energy devices . The applicant have made a vague and vain attempt to get their product within the ambit of Solar power based devices , while as we have already discussed above, the product merely provides solar power as an alternate source to predominantly AC power sourced device. We also find it interesting to note that even the packing of the impugned product does not intend to describe it as solar power based device. That being the case we find the argument of the applicant outlandish and arbitrary and a weak attempt to avail concessional rate. Thus, the product Nano Rechargeable LED Torch Light is classifiable under Chapter Head 8513 presently attracting GST @18% - the product in the question will not be entitled to concessional rate of GST @5% under Sr.No.234 of Schedule-I to Notification No.01/2017-CT(Rate) dtd.28.06.2017 as the same is not a Solar Based Device .

Summary

Issues:
1. Classification of LED Torch for GST rate determination.
2. Eligibility for concessional GST rate as a solar-based device.

Classification of LED Torch for GST rate determination:
The case involved an application filed by a company desiring registration under the Goods & Services Tax Act for trading and manufacturing solar LED Torches. The applicant sought clarification on the GST rate applicable to their product. The applicant argued that the LED Torch should be classified under HSN 8469/8513 and attract a 5% tax rate. They provided samples of invoices to support their claim. The applicant emphasized that the torch with a solar panel and an internal assembly for solar charging should be considered a solar-based device eligible for the 5% GST rate. They highlighted the common trade practice of supplying solar devices with separate panels and the necessity of a 5-meter cable for efficient charging. The applicant also cited legal precedents and government notifications to support their classification. The concerned officer, however, contended that the product did not qualify as a solar-based device and should be taxed at 18%.

Eligibility for concessional GST rate as a solar-based device:
The Authority for Advance Ruling carefully considered the arguments presented by the applicant and the concerned officer. The ruling focused on whether the LED Torch could be classified as a solar-based device to qualify for the concessional GST rate of 5%. The Authority analyzed the product's features, including the provision for both solar and AC charging, and the presence of a solar panel as an optional accessory. Despite the applicant's assertions and legal references, the Authority concluded that the LED Torch, primarily designed for AC charging, did not meet the criteria to be classified as a solar-based device. The ruling emphasized that the product's packaging and functionality did not align with the characteristics of a solar-powered device. Therefore, the LED Torch was classified under Chapter Head 8513 and subject to an 18% GST rate, not the concessional 5% rate for solar-based devices.

This detailed analysis of the judgment showcases the thorough examination of the product's classification and eligibility for a concessional GST rate, highlighting the key arguments presented by the applicant and the final ruling by the Authority for Advance Ruling.