2020 (7) TMI 408 - AAR - GST

Classification of goods - Tamarind Seed - taxable at Nil Rate under HSN Code 1209 (Forest Trees Seed) or not - HELD THAT - The appellant at the time of Personal Hearing admitted that the tamarind seed/kernel as traded by them is sold to Millers and meant for commercial /industrial purpose. Moreover no certificate or any other document certifying the tamarind kernel/ seed meant for sowing purpose is submitted by the applicant. Coming to the classification issue, CBIC in its FAQs published on HSN code and GST Rates dt 03.08.2017 gave a clarification that tamarind kernel falls under HSN Code 1207. As per the powers vested in the Governor of Andhra Pradesh vide section 28-G of the Andhra Pradesh Forest Act 1967, (Act 1 of 1967) in its application to the scheduled Areas in the Andhra Pradesh made A.P. preservation of Private Forest Rules, 1978 - Chinta is the Local name of Tamarind. Therefore, as per the Indian forest Act, 1927 and the Andhra Pradesh forest Act, 1967, Tamarind Tree is declared as forest tree. According to the Andhra Pradesh preservation of Private forest rules, 1978, a Product or a tree specified in the schedules to the Rules, whether those are produced in forest area or other than forest area, all rules and regulations are applicable as if those are forest products. Tamarind trees are forest trees. Seeds of Tamarind trees are nothing but seeds of forest trees which Tamarind seed is classified under HSN code 1207 and attracts tax rate of 5%.

Summary

Issues involved:
1. Classification of Tamarind Seed under HSN Code 1209 for tax purposes.

Analysis:
The applicant sought an advance ruling on whether Tamarind Seed attracts a Nil Rate of Tax under HSN Code 1209, specifically categorized as "Forest Trees Seed." The applicant argued that the HSN classification and the definition of forest produce under the Indian Forest Act support the interpretation that Tamarind Seed should be considered as seeds of a kind used for sowing, thus attracting a Nil rate of tax. They referenced notifications and rules to establish that Tamarind is declared as a forest produce, emphasizing its classification as a forest tree under relevant regulations.

During the personal hearing, the applicant reiterated their stance, relying on the HSN classification, Supreme Court precedents, and governmental declarations to support their claim. However, the Authority noted that the applicant admitted to selling Tamarind Seed for commercial/industrial purposes without providing documentation certifying it for sowing. The Authority referenced CBIC FAQs clarifying the classification of Tamarind Kernel under HSN Code 1207, which attracts a 5% tax rate, contrary to the applicant's claim under HSN Code 1209.

In the final ruling, the Authority determined that Tamarind Seed falls under Schedule-I, Sl. No. 70 of Chapter 1207 as per Notification No. 1/2017 - Central Tax (Rate), attracting a tax rate of 5% (2.5% CGST + 2.5% SGST). Despite the applicant's arguments based on HSN classification and forest produce definitions, the Authority upheld the classification under Chapter 1207, aligning with CBIC clarifications and tax notifications. The ruling emphasized the specific tax treatment based on the classification provided under the applicable notifications and regulations, leading to the conclusion of the case.