2021 (12) TMI 465 - AAR - GST

Classification of supply - rate of tax - supply of pulp wood - classifiable in terms of Chapter 4401? - HELD THAT - The HSN Code 4403 covers timber for sawing; poles for telephone, telegraph or electrical power transmission lines; unpointed and unsplit piles, pickets, stakes, poles and props; round pit-up-props; logs; whether or not quarter-split, for pulping; round logs for the manufacture of veneer sheets, etc; logs for manufacture of match sticks, wood ware, etc. - This HSN code clearly covers poles, props and logs for pulping. The applicant is supplying logs for pulping therefore the commodity dealt by him HSN code 4403 which is enumerated at Sl.No.134 of Schedule-III and hence taxable at the rate of 9% under CGST SGST respectively.

Summary

Issues:
1. Interpretation of correct tax rate for the supply of pulp wood under Chapter 4401.
2. Applicability of Circular No. 80/64/2018-GST clarifying the tax rate for wood logs for pulping.
3. Validity of the application under Section 97 of the GST Act.
4. Determination of the correct HSN code and tax rate for the supply of wood logs for pulping.

Analysis:
1. The applicant sought clarification on the correct tax rate for the supply of pulp wood under Chapter 4401. The applicant believed the tax rate to be 2.5% based on their interpretation of Notification No.1 of 2017. However, Circular No. 80/64/2018-GST clarified that wood logs for pulping are taxed at 18%. The Authority determined that the correct HSN code for the commodity supplied by the applicant is 4403, taxable at 18% under CGST and SGST.

2. The applicant raised a query regarding the applicability of Circular No. 80/64/2018-GST, contending that it lacked a legal basis. The Authority independently assessed the issue and concluded that the Circular's clarification on the tax rate for wood logs for pulping is valid and binding. The Circular specified the tax rate of 18% for such transactions, superseding any conflicting interpretations.

3. The application was scrutinized for its validity under Section 97 of the GST Act. The applicant complied with the procedural requirements by submitting the necessary fee and documentation. The jurisdictional officer raised no objections to the application, leading to its admission by the Authority for Advance Ruling. This ensured that the queries raised by the applicant fell within the purview of Section 97.

4. The Authority extensively discussed the correct classification of the commodity supplied by the applicant. The applicant's contention that the commodity falls under Sl.No.198 of Schedule-I was refuted based on a detailed analysis of the relevant entries in Notification No.1 of 2017. The correct classification was determined to be under HSN code 4403, taxable at 18% under CGST and SGST. This thorough analysis led to the issuance of a ruling stating that the payment of GST at 5% for the supply of pulp wood under Chapter 4401 was incorrect, and the correct HSN code and tax rate are 4403 and 18%, respectively.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues addressed and the Authority's findings on each aspect of the case.