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2025 (3) TMI 238 - AAR - GSTClassification of goods - PVC raincoats - to be classified as plastic (HSN Code 3926) or textile (HSN Code 6201) items under GST? - GST rate of PVC raincoat - If the price of PVC raincoat comes under Rs. 1000/- then does it attract 5% tax on it? - HELD THAT - Hon ble Supreme Court in case of Commercial Tax Officer v Binani Cement Ltd 2014 (3) TMI 905 - SUPREME COURT emphasized on latin maxim of generalia specialibus non derogant i.e general law yields to special law when operate in the same field on same subject. In the case in hand there can be no denying that the only function of using raincoat is to take shield from rain and therefore it is used as garment/apparel in common parlance. PVC sheet cannot be regarded as a woven fabric. Even in common parlance the item PVC sheet is not considered as textile materials. The contention of the applicant canot be accepted that the item PVC raincoat would be classified under HSN 6201 40 10 since to qualify to be an item under chapter 62 it must be an article of textile fabric. It is not disputed that the item PVC raincoat in common parlance is known as apparel. The item being an apparel which is primarily composed of polyvinyl chloride (PVC) would be classified under HSN 3926 20 as Articles of apparel and clothing accessories (including gloves mittens and mitts). Conclusion - Supply of PVC raincoat as manufactured by the applicant would be covered under Heading 3926 and would attract tax @ 18% vide entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 corresponding West Bengal State Notification No.1125 F.T. dated 28.06.2017 as amended.
ISSUES PRESENTED and CONSIDERED
The core legal questions presented and considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Classification of PVC Raincoats Relevant Legal Framework and Precedents: The classification of goods under the GST regime is guided by the Customs Tariff Act, 1975, and the CGST Notification 01/2017 - Central Tax (Rate). The interpretative provisions of the Customs Tariff Act, including section notes and chapter notes, are binding for determining GST classifications. The applicant relied on a ruling by the Customs Authority for Advance Rulings (CAAR) in the case of NZ Seasonal Wear Pvt. Ltd., which classified similar PVC raincoats under HSN Code 6201. Court's Interpretation and Reasoning: The Authority analyzed the manufacturing process and material composition of PVC raincoats, emphasizing that PVC is a synthetic polymer. The Authority considered the definition of textiles and plastics, examining whether PVC raincoats could be classified as textile articles. The Authority referred to previous judicial precedents, including the Supreme Court's decisions in Porritts & Spencer (Asia) Ltd. and Bengal Waterproof Ltd., which addressed the classification of textile and non-textile materials. Key Evidence and Findings: The applicant argued that PVC raincoats, despite being made from synthetic polymer, should be classified as textile articles based on their function and the precedent set by the CAAR ruling. The applicant provided a detailed manufacturing process, highlighting the use of thermal or chemical bonding to create a seamless, non-woven structure. Application of Law to Facts: The Authority examined the manufacturing process of PVC sheets and concluded that PVC sheets cannot be regarded as woven fabric. The Authority noted that, in common parlance, PVC sheets are not considered textile materials. Therefore, the Authority determined that PVC raincoats should be classified under HSN Code 3926 as articles of plastic. Treatment of Competing Arguments: The applicant's argument for classification under HSN Code 6201 was based on the functional characteristics and commercial practices of PVC raincoats. However, the Authority emphasized the material composition of PVC as a synthetic polymer and the explicit exclusions in Chapter 39 of the Customs Tariff. Conclusions: The Authority concluded that PVC raincoats, being primarily composed of polyvinyl chloride, should be classified under HSN Code 3926 as articles of plastic. This classification aligns with the material composition and the statutory framework provided by the Customs Tariff Act. Applicable GST Rate for PVC Raincoats Relevant Legal Framework and Precedents: The applicable GST rate is determined by the Schedule provided in CGST Notification 01/2017 - Central Tax (Rate). The notification specifies the GST rates for different goods, with classifications guided by the Customs Tariff Act. Court's Interpretation and Reasoning: The Authority referred to entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate), which specifies the GST rate for plastic articles under heading 3926. Key Evidence and Findings: The Authority found that PVC raincoats, classified under HSN Code 3926, fall under the category of "Other articles of plastics and articles of other materials of heading 3901 to 3904," attracting a GST rate of 18%. Application of Law to Facts: Based on the classification of PVC raincoats under HSN Code 3926, the Authority determined that the applicable GST rate is 18%, as specified in the notification. Conclusions: The Authority concluded that the supply of PVC raincoats, as manufactured by the applicant, would attract a GST rate of 18% under entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate). SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "Supply of PVC raincoat as manufactured by the applicant would be covered under Heading 3926 and would attract tax @ 18% vide entry no. 111 of Schedule-III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017." Core Principles Established: The classification of goods under the GST regime is guided by the material composition and statutory framework provided by the Customs Tariff Act. The explicit exclusions in the chapter notes of the Customs Tariff are crucial in determining the appropriate classification. Final Determinations on Each Issue: PVC raincoats are classified as articles of plastic under HSN Code 3926, attracting a GST rate of 18% as per the relevant notification.
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