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2024 (6) TMI 106 - AAR - GSTClassification of supply - supply of EDF Thrusters with Battery Pack for Jet Suit - HSN code for supply - applicable rate of tax under the Central Goods and Services Tax Act, 2017 and Karnataka State Goods and Services Tax Act, 2017 on the such supplies - HELD THAT - The impugned supply of EDF Thrusters involves EDF Thrusters and Battery packs along with the performance mapping and test report. It is an admitted fact that the applicant does not manufacture the EDF thrusters and battery packs but procures domestically or imports them. The important aspect of the supply involved is the performance of the said EDF thrusters and thus the supply will be done on acceptance of the performance mapping and test report by the recipient, of the impugned supply. Therefore the applicant is involved in supply of EDFs i.e. Electrical Ducted Fans along with Battery packs and the accessories such as mounting brackets, wiring etc. Classification of EDF Thrusters with Battery Pack for Jet Suit - HELD THAT - EDF is a type of propulsion system commonly used in electric radiocontrolled (RC) planes and some small drones. EDFs are designed to mimic the appearance and function of jet engines, that are powered by electric motors and are typically more compact. They consist of a ducted fan, which is essentially a fan enclosed in a cylindrical housing (the duct). The product EDF i.e. Electric Ducted Fan , works on electric current drawn from the battery - the impugned product specifically classifiable as a fan, enclosed by a metal sheet. - the EDF (Electric Ducted Fan) Thrusters are classifiable under CTH 84145990. Rate of tax - HELD THAT - Entry Number 317B of Schedule III to the Notification 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, specifies the GST rate of 18% for the goods falling under 8414, having description Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; Gas-tight biological safety cabinets, whether or not fitted with filters other than bicycle pumps, other hand pumps and parts of air or vacuum pumps and compressors of bicycle pumps. In the instant case the impugned product merits classification 8414 5990, as a fan and thus attracts 18% GST in terms of the entry number 317B.
Issues Involved:
1. Classification of "EDF Thrusters with Battery Pack for Jet Suit". 2. Applicable HSN code for the supply. 3. Applicable rate of tax under the CGST Act, 2017 and KGST Act, 2017. Summary: Issue 1: Classification of "EDF Thrusters with Battery Pack for Jet Suit" The applicant sought an advance ruling on the classification of "EDF Thrusters with Battery Pack for Jet Suit" supplied to DEBEL. The applicant contended that the Jet Suit qualifies as an aircraft under the Aircraft Act, 1934, and thus the EDF Thrusters with Battery Pack should be classified as parts of aircraft under HSN code 8802 or 8806. However, the authority noted that the Jet Suit derives support in the atmosphere by generating thrust against the earth's surface, which does not meet the definition of an aircraft u/s 2(1) of the Aircraft Act, 1934. Additionally, the applicant did not provide any DGCA license/registration/exemption for operating an aircraft. Therefore, the authority concluded that the EDF Thrusters with Battery Pack do not qualify as parts of aircraft. Issue 2: Applicable HSN Code The authority examined the classification of the EDF Thrusters and determined that they are a type of propulsion system commonly used in electric RC planes and small drones. The EDF Thrusters are essentially fans enclosed in a cylindrical housing, powered by electric motors. Based on the Customs Tariff Act, 1975, and the general rules for the interpretation of the harmonised system, the authority classified the EDF Thrusters under CTH 8414.5990 as "Fans Others." Issue 3: Applicable Rate of Tax The authority referred to Entry Number 317B of Schedule III to the Notification 1/2017-Central Tax (Rate) dated 28.06.2017, which specifies an 18% GST rate for goods falling under 8414, including fans. Consequently, the applicable rate of GST on the supply of "EDF Thrusters with Battery Pack for Jet Suit" is 18%. Ruling: a) The supply of "EDF Thrusters with Battery Pack for Jet Suit" made by the applicant to DEBEL merits classification as "Fan Others" category. b) The applicable HSN code for "EDF Thrusters with Battery Pack for Jet Suit" is 8414.5990. c) The applicable rate of GST on the supply is 18%.
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