CBIC CLARIFICATIONS ON ‘GOODS’ AND ‘AS IS OR AS IS WHERE IS’ BASIS

[Dr. Sanjiv Agarwal]

CBIC clarification GST rates and classification of goods - Circular No. 235/29/2024-GST dated 11.10.2024

Based on the recommendations of the GST Council in its 54th meeting held on 9th September 2024, CBIC has issued clarifications regarding GST rates and  classification of goods.

• GST rate on extruded / expanded savoury food products.

• W.e.f. 10.10.2024, the classification of extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion), falling under HS 1905 90 30 would attract GST at the rate of 12% prospectively (and at 18% for the past period) which is at par with namkeens, bhujia, mixture, chabena (pre-packaged and labelled) and similar edible preparations in ready for consumption form which are classifiable under HS 2106 90 of entry 46 of Schedule II of Notification 1/2017-Central Tax(Rate) dated the 28th June, 2017.
• GST rate of 5% would continue on un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion.

• GST rate on Roof Mounted Package unit (RMPU) Air Conditioning Machines for Railways?

• Roof mounted air conditioners for railways would be classified under HSN 8415 and attract 28% GST rate [under S.No. 119 of Schedule IV of Notification No. 1/2017-CT(Rate) dated 28.06.2027].
• The goods falling under heading 8607 (including parts of railways or tramway locomotives) attract a GST rate of 18% vide S. No. 398G of Schedule III of notification No. 01/2017-CT (Rate) dated 28.06.2017 (as amended).
• Machines and apparatus of heading 8415, which include Air conditioning machines, are excluded from the ambit of ‘parts’ covered under heading 8607 as per Section note 2 of Section XVII of Customs Tariff Act, 1975.
• Goods of heading 8401 to 8479 (including 8415 – Air Conditioning Machines) are excluded from the ambit of ‘parts’ covered under Chapter 86.
• To make it explicitly clear, it is clarified that the Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways are classified under HS 8415.

• GST rate on Car and Motor Cycle Seats

• Seats for two wheelers would be classifiable under HS 8714 attracting GST rate of 28% while seats for four wheelers is classifiable under HS 9401 and attracts GST rate of 18%.
• In order to bring parity with seats of motorcycles with effect from 10.10.2024 car seats classifiable under HS 9401 shall attract GST at the rate of 28% to be applicable prospectively.

Clarification on scope of ‘As is or As is where is’ basis - Circular No. 236/30/2024-GST dated 11.10.2024

CBIC has recently issued certain clarification, based on the recommendation of GST Council where by payment of GST by taxpayers was sought to be regularized on ‘As is’ or ‘As is where is’ basis. These related to applicable GST rates and appropriate classification of specified goods or service or both on the basis of recommendation of the GST Council in its various meetings.

• Circulars have been issued based on recommendation of the GST Council wherein GST non-payment/ short-payments for past period have been regularized “As is” or As is, where is basis” in certain cases for supply of goods or services or both.
• Regularization for the past period has been done, on the recommendations of the Council, in situations, such as, where genuine doubts have arisen as there are two competing entries with different rates in the notifications or issues have arisen due to diverse interpretation resulting in a situation where some suppliers have paid a lower rate of GST (including nil rate on account of an exemption entry) and some suppliers have paid a higher rate of GST. It has also been clarified that where taxpayers had paid at the higher GST rate, in such situations they shall not be entitled to any refund.
• 54^th GST Council meeting recommended to clarify the intent behind such regularization of payment of GST.
• In the context of GST, the phrase ‘regularized on as is where is’ basis means that the payment made at lower rate or exemption claimed by the taxpayer shall be accepted and no refund shall be made if tax has been paid at the higher rate.
• The intention is to regularize payment at a lower rate including nil rate due to the tax position taken by taxable person, as full discharge of tax liability.
• The tax position of a taxable person is reflected in the returns filed by the person where the applicable rate of tax (or relevant exemption entry) on a transaction/supply is declared.
• In cases where the matters have been regularized on “as is” or “as is, where is basis”, in case of two competing rates and the GST is paid at lower of the two rates, or at nil rate where one of the competing rates was nil under notification entry, by some suppliers while other suppliers have paid at higher rate, payment at lower rate shall be treated as tax fully paid for the period that is regularized.
• Thus, there is not requirement to pay the difference between higher and lower rates. In case the payment was made at a higher rate, no refund will be made.