2021 (10) TMI 148 - AAAR - GST

Classification of goods - rate of GST - supply of Fly Ash Bricks - Fly Ash Blocks - classifiable under Chapter heading 68159090 or not - taxed @ 5% and @ 12% respectively under the GST Act or not - Time limitation - HELD THAT - The appellant was required to file the appeal in the present case, on or before 07.08.2020, but has filed the same on 31.08.2020 i.e. within the time limit provided in the aforementioned notification. In view of the above, we find that there is no delay on the part of the appellant in filing the said appeal which has been filed by them within the time limit prescribed in the Notification No.35/2020-Cenral Tax dated 03.04.2020(as amended). Classification of goods - Fly Ash Bricks - HELD THAT - It been the intention of the GST council to classify Fly Ash Bricks and Fly Ash aggregates separately, Fly Ash Bricks would have been separately mentioned in Sr.No.225B above, in the same way as Fly Ash Blocks has been mentioned in the said entry. Moreover, it is also seen that the conditions envisaged in the above entry remains unchanged even after an intervening period of more than 2 years after the initial insertion of the aforementioned entry. It therefore appears that the Government intends to give benefit of the aforementioned entry only to those manufacturers who manufacture Fly Ash Bricks which contain 90% or more fly ash content - Rule 2(a) of the General Rules of Interpretation is not applicable for classification of Fly Ash Bricks in the present case. Fly Ash Bricks found mention in Sr.No.177 of Schedule-II of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017(on which GST leviability was 12%) but was omitted from Sr.No.177 with effect from 15.11.2017 vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017. Further, it is also seen that vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017 which amended Notification No.1/2017-Central Tax (Rate), Sr.No.225A has been inserted in Schedule-I of the said notification wherein Fly Ash Bricks with 90% or more fly ash content, finds mention. However, since the Fly Ash Bricks manufactured by the appellant are containing Fly Ash content of only 60%, the same will not be covered under the said Sr.No.225A. Since the Fly Ash Bricks (containing 60% fly ash content) manufactured and supplied by the appellant does not find mention in any of the entries of any of the Schedules I, II, IV, V and VI of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017(as amended from time to time), it is concluded that the same would be covered under Sr.No.453 of Schedule-III of Notification No 01/2017-Central Tax(Rate) with effect from 15.11.2017 - the GST rate on Fly Ash Bricks will be 18% with effect from 15.11.2017. Application rejected.

Summary

Issues Involved:
1. Classification of Fly Ash Bricks under GST.
2. Applicable GST rate for Fly Ash Bricks.
3. Interpretation of GST Notifications and HSN Codes.
4. Consideration of GST Council Recommendations.
5. Delay in filing the appeal.

Detailed Analysis:

1. Classification of Fly Ash Bricks under GST:
The primary issue was whether Fly Ash Bricks should be classified under Tariff item 68159910 or another heading. The appellant argued that their Fly Ash Bricks should fall under entry 225B of Schedule I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, which would subject them to a 5% GST rate. The Advance Ruling Authority had classified Fly Ash Bricks under entry 453 of Schedule III, subjecting them to an 18% GST rate, due to the bricks containing less than 90% fly ash content.

2. Applicable GST Rate for Fly Ash Bricks:
The appellant contended that Fly Ash Bricks should be taxed at 5% under entry 225B of Schedule I, arguing that the condition of 90% or more fly ash content was erroneously applied. However, the authority maintained that since the bricks contained only 60% fly ash, they did not meet the criteria for the 5% rate under entry 225B and were correctly classified under entry 453 of Schedule III, attracting an 18% GST rate.

3. Interpretation of GST Notifications and HSN Codes:
The appellant cited the Supreme Court judgment in the case of Collector Of Central Excise v/s Wood Craft Products Ltd, arguing that the classification should follow the HSN codes. The authority agreed that Fly Ash Bricks fall under HSN 6815 but emphasized that the specific GST notification required 90% or more fly ash content for the lower tax rate, which the appellant's product did not meet.

4. Consideration of GST Council Recommendations:
The appellant referred to GST Council minutes suggesting a 5% rate for Fly Ash Bricks irrespective of fly ash content. However, the authority noted that the official notifications issued post-GST Council meetings clearly stipulated the 90% fly ash content requirement for the 5% GST rate. The authority held that the legislative intent was to apply the 5% rate only to Fly Ash Bricks with 90% or more fly ash content.

5. Delay in Filing the Appeal:
The appeal was filed 24 days after the due date. The appellant cited hospitalization of their advocate due to pneumonia and subsequent quarantine as reasons for the delay. The authority considered the notifications extending the filing deadlines due to COVID-19 and found the appeal to be filed within the extended time limit.

Conclusion:
The appellate authority upheld the original ruling, confirming that:
1. Fly Ash Bricks manufactured and supplied by the appellant are classifiable under Tariff item 68159910.
2. The applicable GST rate is 12% up to 14.11.2017 and 18% from 15.11.2017 onwards, as per Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time).
3. The appeal was rejected, and the classification and tax rate determined by the Advance Ruling Authority were affirmed.