2023 (3) TMI 1255 - AAR - GST

Classification of goods - Sugarcane Juice - Rate of GST applicable on sale of Sugarcane Juice - Applicability of a notification which affects the rate of tax if any. HELD THAT - Sugarcane juice cannot be classified as Agricultural produce because agricultural produce is defined under explanation (vii) under para 4 of the Notification No. 11/2017 Central Tax (Rate) dated 28.62017 as agricultural produce' means any produce out of cultivation of plants and rearing all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually one by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. In the present case sugarcane juice is produced by way of crushing of sugarcane and hence not produced by farmer. Also process changes it's form and constitution alongwith changes are of such nature that if it is to be attain the secondary market for use and become raw material for production of sugar, molasses etc. - Since all the three Conditions of agricultural produce is not fulfilled by sugarcane juice and hence it is not considered to be agricultural produce. Sugarcane is usually a type of grass/plant, sugarcane is not the result of flowering plant nor does it develop through seeding. So sugarcane can not be considered as fruit. Sugarcane fiber and stalks can not be eaten or digested, so it does not qualify as a vegetable either. In GST Tariff, goods under chapter 20 is preparation of vegetables, fruits, nuts or other parts of plants Sugarcane as neither fruit nor vegetable nor nuts but it is covered under other parts of plants. The Tariff item 2009 contains specific description of Fruit and Vegetable Juices Sugarcane is neither fruit nor vegetable nor nuts but it is covered under other parts of plants as such Rule 3(a) of General Rules for the Interpretation of Import Tariff will apply and the same merits classification under HSN 20098990 - Hence sugarcane juice is classified under chapter 20 and tariff item 20098990 which falls in Notification No. 1/2017 Central Tax (Rate) dated 28-06-2017 covered in schedule 2, Sr. No. 41 and taxable at a rate of 6% CGST 6% SGST or 12 % IGST.

Summary

Issues Involved:
Classification of Sugarcane Juice, Rate of GST applicable on sale of Sugarcane Juice, Applicability of a notification affecting the tax rate.

Classification of Sugarcane Juice:
The applicant, a sugar manufacturer, sought clarification on the classification of sugarcane juice for GST purposes. The Authority examined the definition of agricultural produce and determined that sugarcane juice does not meet the criteria to be classified as agricultural produce. As sugarcane juice is not a fruit or vegetable, it falls under the category of "other parts of plants." Following the General Rules for the Interpretation of Import Tariff, the Authority classified sugarcane juice under chapter 20 and tariff item 20098990, taxable at 6% CGST & 6% SGST or 12% IGST.

Rate of GST on Sale of Sugarcane Juice:
Regarding the rate of GST applicable on the sale of sugarcane juice, the Authority referred to Notification No. 1/2017 Central Tax (Rate) dated 28-06-2017. Although there was no specific entry for sugarcane juice, the closest entry was found at Sr. No. 41 of Schedule II of the notification, attracting a tax rate of 6% CGST and 6% SGST or 12% IGST. Therefore, the Authority ruled that sugarcane juice is taxable at this rate.

Applicability of Notification Affecting Tax Rate:
The Authority confirmed that Notification No. 1/2017 Central Tax (Rate) dated 28/6/2017 would be applicable to determine the tax rate on the sale of sugarcane juice. This notification covers the classification and taxability of fruit juices and vegetable juices, unfermented and not containing added spirit, aligning with the classification of sugarcane juice under chapter 20 and tariff item 20098990.

Conclusion:
The Authority, comprising two members, unanimously ruled that sugarcane juice is classifiable under chapter 20 and tariff item 20098990, taxable at 6% CGST & 6% SGST or 12% IGST. The ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh, subject to the provisions under Section 103(2) of the CGST Act, 2017, unless declared void under Section 104(1) of the Act.