2020 (2) TMI 556 - AAR - GST

Concessional Rate of GST - manufacture of laboratory medical equipment like Autoclaves, Incubators, Rotary Vacuum Evaporators, etc., and supply the same to their distributors who are not engaged in scientific research of any type - N/N. 45/2017 47/2017 - validity of certificates issued by end users. HELD THAT - The applicant does not supply goods to end users who undertake or are engaged in the scientific research. The goods are supplied to their distributors only. The applicant has submitted that the end-user institutions, to whom goods are supplied by their distributors, are mainly included in Sr. No. 2 of Notification No. 45/2017-C.T. (Rate) dated 14.11.2017. In respect of institutions mentioned at Sr. No. 2, the said notification clearly states that the said institutions should be registered with the Government of India in the Department of Scientific and Research, which- (i) produces, at the time of supply, a certificate to the supplier, from the head of the institution, in each case, certifying that the said goods are essential for research purposes and will be used for stated purpose only and that, the said goods shall not be or sold by the institution for a period of five years from the date of installation - The said notification requires the said certificate to be issued to the supplier, who in the subject case, is the distributor and not the applicant. Thus it is clear that the applicant does not satisfy the conditions of the said Notification No. 45/2017 - thus, the applicant cannot sell their product to their dealers / distributors by charging GST @ 5.00% as per Notification Nos. 45/2017 - C.T. (Rate) 47/2017 S.T. (Rate), both dated 14.11.2017. Can a certificate issued by the end user (scientific research organization) mentioning the name or the manufacturer (WE in this case) the name of the seller (our distributor) be held valid to enable the applicant to invoice their product to their dealer at concessional rate of GST @ 5.%? - HELD THAT - In the instant case, the question raised by the applicant is not pertaining to any of the matters mentioned in Section 97 (2) of the GST Act - Section 97(2), which encompasses the questions, for the ruling by this Authority does not deal with the issue of validity of certificates used by end-users of subject products. Hence, it is held that this authority does not have jurisdiction to pass ruling on such matters.

Issues Involved:
1. Eligibility to sell products to dealers/distributors by charging GST at 5% under Notification No. 45/2017 and 47/2017.
2. Validity of a certificate issued by the end user (scientific research organization) for invoicing products to dealers at a concessional rate of GST at 5%.

Detailed Analysis:

Issue 1: Eligibility to Sell Products to Dealers/Distributors by Charging GST at 5%

The applicant, M/s. Equitron Medica Private Limited, engaged in manufacturing laboratory medical equipment, sought clarification on whether they could sell their products to dealers/distributors at a concessional GST rate of 5% as per Notification Nos. 45/2017 and 47/2017. These notifications allow a reduced GST rate for supplies made to institutions engaged in scientific research.

The applicant argued that since the end use of their products is for scientific research, they should be allowed to sell to distributors at the concessional rate, provided a certificate from the end user (scientific research organization) is obtained. However, the jurisdictional officer contended that the applicant supplies goods to distributors at the standard GST rate of 18%, and the distributors, in turn, sell to research institutions at the concessional rate of 5%.

Upon examination, it was found that the applicant does not directly supply goods to the end users engaged in scientific research but to distributors who are involved in trading. The notifications in question require the goods to be supplied directly to the research institutions, along with a certificate from the head of the institution certifying the goods are for research purposes and will not be sold for five years. Since the applicant supplies to distributors and not directly to the end users, they do not fulfill the conditions stipulated in the notifications.

Conclusion:
The applicant cannot sell their products to dealers/distributors by charging GST at 5% as per Notification Nos. 45/2017 and 47/2017.

Issue 2: Validity of a Certificate Issued by the End User for Invoicing Products to Dealers at a Concessional Rate

The applicant also inquired whether a certificate issued by the end user (scientific research organization) mentioning the manufacturer and the seller could enable them to invoice their products to dealers at a concessional GST rate of 5%.

The authority examined whether this question falls under the purview of Section 97(2) of the CGST Act, which outlines the scope of questions that can be addressed in an advance ruling. Section 97(2) includes questions related to the classification of goods/services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, registration requirements, and whether an activity amounts to a supply of goods/services.

The authority found that the question regarding the validity of certificates issued by end users does not pertain to any of the matters mentioned in Section 97(2). Therefore, the authority does not have jurisdiction to pass a ruling on this issue.

Conclusion:
The question regarding the validity of a certificate issued by the end user is not maintainable under the provisions of the GST Act, and hence, no ruling can be provided on this matter.

Order:
1. The applicant cannot sell their products to dealers/distributors by charging GST at 5% as per Notification Nos. 45/2017 and 47/2017.
2. The question regarding the validity of a certificate issued by the end user is not maintainable and thus not answered.

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