2021 (8) TMI 734 - AAR - GST

Classification of goods - Garbage Compactor and Hook Loader/ Garbage Tipper - classified under Chapter Heading 8705 (Special purpose motor vehicles other than those principally designed for transport of persons or goods) or not - rate of IGST at 18% in terms of Sl.No.401A of Schedule III of N/N. 01/2017 Integrated Tax (Rate) dated 28.06.2017 and CGST and SGST at the rate of 9% respectively in terms of the corresponding rate notification - HELD THAT - The applicant is engaged in the manufacture and sale of commercial motor vehicles such as buses, trucks, light vehicles and parts thereof. They also manufacture and sell special purpose vehicles such as road sweeper truck, suction-cum-jetting machine, hook loader/garbage tipper and refuse/garbage compactor vehicle. The clearances have been effected by their Rajasthan and Karnataka units only and the applicant unit at Chennai has not received any orders for such supply presently. Though the applicant has stated that they intend to receive order for future supply, the applicant has not established this claim of theirs through any documentary evidence like tenders for proposed supply of such goods, etc, though the applicant's entity at Karnataka and Rajasthan have undertaken supplies of such goods. Further, the applicant did not dispute the fact that the products for which classification is sought is custom made as per the required specifications of the recipient/buyer. It is seen that special purpose motor vehicles are specially constructed or adapted and equipped with certain devices to enable them to perform the functions. Thus it is clear that such vehicles will be custom made for which purchase orders with the specification of the goods are necessary. To classify a product, the complete nature of the product and features of the product should be known - Here the products are not manufactured by the applicant as reported by the Jurisdictional Authority and no purchase orders/tenders for such supply have been produced by the applicant. As per Section 95 of the GST Act, Advance Ruling can be sought in respect of the proposed supplies. In the case at hand, the ruling sought on the classification of the product, can be decided only based on the nature, features, intended purposes. It is pertinent to note that the applicant themselves have stated that they had not made any supplies and only their entities in the State of Karnataka and Rajasthan have undertaken such supplies - the application requiring the classification of the said goods cannot be admitted for consideration in merits and the application is rejected.

Summary

Issues Involved:
1. Classification of Garbage Compactor and Hook Loader/Garbage Tipper under Chapter Heading 8705 or 8704.
2. Determination of applicable GST rate for the aforementioned vehicles.
3. Admissibility of the application for advance ruling based on the current and proposed manufacturing activities.

Issue-wise Detailed Analysis:

1. Classification of Garbage Compactor and Hook Loader/Garbage Tipper:
The applicant contended that the Garbage Compactor and Hook Loader/Garbage Tipper should be classified under Chapter Heading 8705, which pertains to "Special purpose motor vehicles other than those principally designed for the transport of persons or goods." The applicant argued that these vehicles are designed specifically for garbage collection and disposal, featuring automated loading, compaction, and unloading mechanisms, which distinguish them from general goods transport vehicles classified under Chapter Heading 8704. They cited various case laws to support their argument that garbage does not qualify as "goods" due to its lack of marketability and intrinsic value.

2. Determination of Applicable GST Rate:
The applicant sought clarification on whether the vehicles in question attract IGST at 18% as per Sl.No.401A of Schedule III of Notification No.01/2017 Integrated Tax (Rate) dated 28.06.2017, and CGST and SGST at the rate of 9% respectively. They emphasized that their products should fall under Chapter Heading 8705, which covers special purpose motor vehicles, and not under Chapter Heading 8704, which pertains to motor vehicles for the transport of goods and attracts a higher GST rate of 28%.

3. Admissibility of the Application for Advance Ruling:
The applicant sought an advance ruling for proposed transactions, asserting that they plan to supply these vehicles from their unit in Tamil Nadu. However, the jurisdictional authorities reported that the applicant had not received any orders for such vehicles and that these vehicles are custom-made to order. The applicant failed to provide documentary evidence, such as purchase orders or tenders, to substantiate their claim of future supply. The authority noted that without specific details about the vehicles' features and intended purposes, it is not feasible to classify the products accurately. Consequently, the application was deemed inadmissible for consideration on merits.

Conclusion:
The application for advance ruling was rejected due to the lack of specific information and documentary evidence regarding the proposed supply of the vehicles in question. The authority emphasized that the classification of custom-made vehicles requires detailed information about their nature, features, and intended purposes, which the applicant failed to provide.