2024 (6) TMI 171 - AAR - GST

Classification of goods - clarification of rate of tax under GST Act - Sleeping Bag Mk4 large - HELD THAT - As per the Rule 3a of the Rules of Interpretation, as applicable to the Customs Tariff, the heading which provides the most specific description shall be preferred V ' to heading having more general description. Further, Hon'ble Supreme Court, in the case of M/s Moorco India vs Collector of Customs, Madras 1994 (9) TMI 68 - SUPREME COURT , has observed that Where the class of goods manufactures by an assessee falls say in more than one heading one of which may be specific, other more specific, third most specific and fourth general. The rule requires the authorities to classify the goods in the heading which satisfies most specific description. Here it may also be pointed out that sleeping bags are specifically mentioned under Chapter Heading 9404 30, hence there is no room for doubt to hold that the applicants product will fall under Chapter Heading 9404 30 90. Further, in view of above discussion, it is observed that the impugned product will fall under the category of quilted textile material and accordingly will attract such GST rate as prescribed under Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 (as amended). As per Schedule II, sleeping bags will fall under Sr. No. 224 having the description as Products wholly made of quilted textile materials and will attract 12% rate of duty. The applicant's product will not fall in Schedule III because, with respect to Chapter Heading 9404, there is only one Serial No. 438 in Schedule III, which excludes products wholly made of quilted textile materials and cotton quilts .

Summary

Issues:
1. Classification of goods for tax purposes under GST Act.
2. Determination of the tax rate applicable to the product "Sleeping Bag Mk4 large."

Analysis:
1. The applicant, a registered assessee under GST, sought an advance ruling regarding the classification of their product, a sleeping bag, under the GST Act. The product specifications included various cotton materials and fell under Chapter HSN 940430, specifically 9404 30, which pertains to products wholly made of quilted textile materials. The applicant contended that the product should be taxed at 12% IGST/6% CGST/6% SGST under this classification.

2. The Authority for Advance Ruling examined the relevant provisions of the CGST Act and UPGST Act and found that the issue raised by the applicant was covered under Section 97(2) of the CGST Act 2017. The applicant sought clarification on the rate of tax applicable to the sleeping bag, emphasizing that it was made of 100% cotton and quilted with cotton yarn. The applicant referenced Notification No. 1/2017-Integrated Tax (Rate) to support their claim for a 12% tax rate on the product.

3. The Authority analyzed the product's composition, the applicable tariff headings, and relevant notifications to determine the correct tax treatment. They referenced specific schedules and rates under the GST Act to conclude that the sleeping bag fell under Chapter Heading 9404 30 90 and should be taxed at 12% (6% CGST and 6% SGST) as a product wholly made of quilted textile materials.

4. In the final ruling, the Authority declared that the product "sleeping bag" would be classified under Chapter Heading 9404 30 90 of the GST Tariff and subject to a 12% GST rate (6% CGST and 6% SGST) as per Notification No. 01/2017-Central Tax (Rate). The ruling was deemed valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh, subject to the provisions of the CGST Act, 2017.