2020 (7) TMI 260 - AAR - GST

Maintainability of Advance Ruling application - Classification of goods - Glass-fibre Reinforced Gypsum Board - benefit of the concessional rate of tax - Schedule II of Notification no - 1/2017 - Central Tax - HELD THAT - As per Section 95 of the CGST Act, (a) advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Hence for the purpose of applying for advance ruling, one must raise questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to undertaken. Thus, the said section says that, in the case of goods, it is the supply being undertaken or proposed to be undertaken. It is not the case that the manufacture of goods may be undertaken or proposed to be undertaken. Thus, goods in respect of which supply being, undertaken or proposed to be undertaken, should be existing - In the subject case applicant has submitted that they are proposing to manufacture the impugned product, which are presently not in existence. Thus their application is also barred under Section 95 of the CGST Act. The subject application is non-maintainable and is therefore liable to be rejected.

Summary

Issues:
Classification of the proposed product as "Glass-fibre Reinforced Gypsum Board" for availing concessional tax rate under Notification no - 1/2017 - Central Tax.

Analysis:
The applicant, a manufacturer of gypsum boards, sought a ruling on the classification of a new product - Glass-fibre Reinforced Gypsum Board (GRG) - for tax purposes. The applicant contended that the product, reinforced with glass-fibre, should qualify for the concessional tax rate of 12% under Notification no - 1/2017. They argued that the presence of any amount of glass-fibre in the board should make it eligible as GRG, even if the quantity is minimal. The applicant cited case laws and applied the Literal Rule of Interpretation to support their claim.

The jurisdictional officer raised concerns about the classification of the product, as it had not been manufactured yet, and no samples were provided for testing. The officer suggested that the classification could only be determined accurately after testing the product in an accredited laboratory. The officer emphasized the need for physical samples to ascertain the exact nature of the proposed product.

During the hearing, both parties presented their arguments, with the applicant stressing the technical aspects of the product and its intended classification. However, the Advance Ruling Authority highlighted the importance of submitting samples for products under consideration for classification. They noted that Section 97(2)(a) of the CGST Act requires questions on classification to be raised concerning goods that are being supplied or proposed for supply. Since the product in question had not been manufactured yet, the Authority deemed the application non-maintainable under Section 95 of the CGST Act, as the goods for which classification was sought did not exist at the time of the application.

Ultimately, the Advance Ruling Authority rejected the applicant's request for an advance ruling, citing the non-maintainability of the application due to the absence of physical samples and the proposed product not being in existence at the time of the application. The decision was made under the provisions of sub-section 2 of Section 98 of the CGST Act, 2017.