2024 (5) TMI 38 - AAR - GST

Classification of goods - paper cups - to be classified under HSN Code 48236900 or not - SGST @ 2.5% rate is rightly charged or not - refund of excess input accumulated in credit ledger due to rate difference of input and outward supply - HELD THAT - A disposable paper cup is made out of paper and often coated with plastic or wax to prevent liquid from leaking out or soaking through the paper. It may be made of recycled paper. It is known that paper cups consist of approximately 95% high-degree cellulose paper board. Generally, disposable paper cups are composed of 5% inner polyethylene (PE) coatings to prevent leakage. It is found that goods under following description falling under Chapter / Heading / Sub-heading / Tariff item 4823 is specified in entry serial number 157 of Schedule-III of Notification No. 1/2017-Central Tax (Rate) dated 28-6-2017 (as amended) and corresponding W.B. State Tax Notification No. 1125 F.T. dated 28.06.2017(as amended) and therefore would attract tax @ 18%.

Summary

Issues involved:
The issues involved in this case are:
1. Classification of HSN Code for paper cups
2. Correctness of SGST rate charged
3. Claiming refund of excess input due to rate difference

Classification of HSN Code for paper cups:
The applicant sought an advance ruling on the correctness of HSN Code 48236900 for paper cups. The Authority admitted the application for this question as it falls under clause (a) of sub-section (2) of section 97 of the GST Act. The applicant classified the disposable paper cup under HSN Code 48236900 and charged output tax at 5%. However, the revenue officer expressed the view that the item should be taxed at 18%. The Authority observed that disposable paper cups fall under Tariff item 4823, attracting tax at 18%. The invoice submitted by the applicant was found to describe a different item under HSN 7114 11 00. Therefore, the ruling was made that the supply of disposable paper cups by the applicant is covered under HSN 4823 40 00 and would attract tax at 18%.

Correctness of SGST rate charged:
The applicant also sought a ruling on whether SGST at a 2.5% rate was correctly charged. However, this question was not admitted as it was not covered under any clause of sub-section (2) of section 97 of the GST Act. The application was admitted only for questions related to the HSN Code classification and the SGST rate charged was not considered for ruling.

Claiming refund of excess input due to rate difference:
The applicant's question regarding claiming a refund of excess input accumulated in the credit ledger due to the rate difference of input and outward supply was not admitted during the hearing. The applicant accepted that this question could not be considered for the ruling. Therefore, the ruling was limited to the classification of the HSN Code for paper cups and the correct tax rate applicable to them.