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2024 (1) TMI 120 - AAR - GSTMaintainability of application for advance ruling - proper chemical composition and nature of product is not submitted - Classification of supply - rate of tax - supply of liquid suspension of guar gum powder (suspended in mineral oil), which is commonly known as guar gum slurry manufactured by the applicant - N/N. 1/2017-CT dated 28.06.2017 as amended - HELD THAT - Without a proper composition report of product, it is not to be ascertain that product will fall under CHAPTER 13 as this chapter denotes about the Lac; gums, resins and other vegetable saps and extracts and Guar Gum Slurry is not predominating the product as applicant claimed that mineral oil is used more than 50%. The authority has asked the report of composition of product from certified laboratory from applicant during the P.H., as the product is new in nature and without any old ruling or proper verification it is not possible to identify any product and decide HSN code. It is not clear whether the process of mixing of guar slurry with mineral oil is simply a mixture or it emerges as new product. The applicant has not submitted the required details before AAR. The ruling can not be pronounced unless the proper chemical composition and nature of product is not submitted. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017.
Issues Involved:
1. Classification of the liquid suspension of guar gum powder (suspended in mineral oil) under GST. 2. Applicable tax rate on the supply of the said product. Summary: Issue 1: Classification of the Liquid Suspension of Guar Gum Powder (Guar Gum Slurry) The applicant, M/s Supreme Gums Private Ltd., proposes to manufacture a liquid suspension of guar gum powder suspended in mineral oil, known as guar gum slurry, primarily used in the oil and gas industry for hydraulic fracturing. The applicant contends that since the product contains more than 50% mineral oil, it should be classified under Chapter 27 of the Customs Tariff Act, 1975, which pertains to mineral fuels, mineral oils, and products of their distillation. The jurisdictional officer, however, suggests that the processed material 'Guar Gum Slurry' should fall under Chapter 13 of the First Schedule to the Customs Tariff Act, 1975, which includes gums, resins, and other vegetable saps and extracts. The officer argues that the product undergoes chemical treatment to improve its properties, thus changing its character and identity. The authority, upon review, notes that Chapter 27 is specific to mineral fuels and oils and does not cover the guar gum slurry as claimed by the applicant. Furthermore, without a proper composition report from a certified laboratory, it is challenging to ascertain the correct classification. The authority also considers Chapter 34, which pertains to lubricating preparations, but the lack of detailed composition prevents a definitive classification. Issue 2: Applicable Tax Rate on the Supply of Guar Gum SlurryDue to the unresolved classification issue, the applicable tax rate on the supply of guar gum slurry remains undetermined. The authority emphasizes the necessity of a certified chemical composition report to accurately classify the product and determine the appropriate GST rate. Ruling:The application for advance ruling is rejected under the provisions of the GST Act, 2017, due to the lack of sufficient information regarding the chemical composition and nature of the product.
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