RECENT ADVANCE RULINGS IN GST (PART-16)

[Dr. Sanjiv Agarwal]

Advance rulings are important in any tax law as it provides a forum for clarification and possible interpretation of statutory provisions. Moreover, it conveys the legislative intention from the revenue’s view point. Provisions of advance ruling are contained in section 95 to 106 of CGST Act, 2017 and State / UT GST enactment. Rules 103 to 107 of also provide for forms, manner, certification etc.

The Authority for Advance Rulings (AAR) have been set up in all the states and we have now over 350 advance rulings on different issues already pronounced by various State Authorities. The appellate mechanism for filing appeals against AAR rulings is also in place and we have about thirty five such appellate orders confirming or modifying the AAR orders. One major issue presently being faced is about multiple authorities (equal to number of States), each pronouncing a ruling of its own even if the matter is covered by some other State AAR’s rulings.  Even the orders from Appellate Authority for Advance Ruling have also started pouring in and we have over two dozen Appellate Orders from AAAR. There are situations where we may have different rulings on same question(s) by different AARs. GST Council / Cabinet has approved (on 23.01.2019)  to have a Centralized Appellate Authority for Advance Ruling under GST that would decide on cases where there are divergent orders at the State level. The same is yet to be finalized.

The summary of few more recent advance rulings pronounced by State Advance Ruling Authorities are discussed hereunder but these needs to be read in the background of the question involved:

Advance ruling on taxability of cold storage of agricultural produce

The assessee was the owner of the cold storage house, providing storage and warehousing facilities for variety of agriculture produce. It made an application before the Authority of Advance Ruling to seek ruling as to whether the goods which comes for storage will come under the definition of agricultural produce or not & whether the supply of Cold Storage services by the applicant firm to various products as mentioned herein below attracts Nil rate of duty or not as per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017. The assessee submitted list of various products and the process done on those agriculture commodities before they come into cold storage.

The Authority for Advance Ruling ruled that goods mentioned under Group A fall under the definition of Agricultural Produce in terms of the aforesaid notification and so supply of cold storage service in relation to these is exempt from the levy of GST. However if any processing is done on these products as is not usually done by a cultivator or producer at farm level, then these would fall outside the definition of agricultural produce as given in the aforesaid Notification and in that case supply of cold storage service in relation to these would remain chargeable to GST. The goods mentioned under Group B to G are not Agricultural produce in terms of the aforesaid notification and so the supply of cold storage service in relation to these would remain chargeable to GST.The goods covered under Groups A to G are listed in the text of case. [In Re: Sardar Mal Cold Storage & Ice Factory 2018 (7) TMI 967 - AUTHORITY FOR ADVANCE RULINGS, RAJASTHAN ; ].

Advance ruling on classification of goods and rate of tax

The assessee was a manufacturer of marine propeller, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings, and all these products are used in fishing/floating vessels. Since, the products manufactured by the unit were mainly used for the purpose of fishing and other allied activities, the applicant was of the opinion that the rate of tax applicable to the above products is 5% as per Entry 247 and 252 of Schedule 1 of the Central Notification No. 1/2017. In order to have a clarification on the same the assessee made application before the Authority for Advance Ruling.

The Authority for Advance Ruling ruled that commodities such as marine propellers, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings used as a part of fishing/floating vessels would come under the Entry 252 of Schedule 1 of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 and State Notification No. 360/2017, dated 30-6-2017 and hence taxable @ 5% [ SGST - 2.5%; CGST - 2.5%.] but if the said commodities are used for some other purpose, then the applicable tax rate would be 18%. [In Re: Dharsak. V.P. 2018 (7) TMI 142 - AUTHORITY FOR ADVANCE RULING, KERALA ].

Advance ruling on classification of goods and rate of GST

The assessee was a retail dealer of implants for joint replacements. It made application before  the Authority for Advance Ruling seeking advance ruling on whether the products get covered under Serial No. E(9) of List 3 of Entry 257 of Schedule I of Notification No. 011/2017-Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 5% or Serial No. 221 of Schedule II of the Notification No. 011/2017-Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 12%.

The implants for joint replacement are clearly and most specifically covered under Sl No. E(9) of List 3 of Entry 257 of Schedule I attracting 5%GST. Further, there is a similar entry under Sl No. 578 - List 30 Entry E(9) of Notification No. 50/2017 - Customs dated 30.06.2017 where under the effective rate of Basic Customs Duty is Nil.

The Authority for Advance Ruling ruled that the implants for joint replacements falling under HSN Code 90213100 are covered under Serial No. E(9) of List 3 of Entry 257 of Schedule I of Notification No. 011/2017 - Central Tax (Rate) dated 28.06.2017 and shall attract GST at the rate of 5%. [In Re: Gopal Gireesh  2018 (6) TMI 705 - AUTHORITY FOR ADVANCE RULINGS, KERALA ].

Advance Ruling on classification of goods and rate of tax

The applicant sought advance ruling on determination of rate of tax of the products which are manufactured by them, i.e., Efavirenz, Emtricitabine, Suntinib Malate, Raltegravir Potasium, Latanoprost.

It was observed that the products manufactured by the applicant, even though are bulk drug gets squarely covered under List I of Sl. No. 180 of the Schedule-1 to the Notification No. 01/2017 Central Tax (Rate) dated 28-6-2017. Further, as it is settled law that the specific entry overrides the general entry, the commodities dealt by the applicant are covered by specific entries, the rate of tax applicable, is the rate specified against specific entry only.

It was ruled that the applicant is eligible to claim the benefit of lower rate of GST i.e., 5 per cent under Sl. No. 180 of Schedule-I of the rate schedule under Notification No. 01/2017 - Central Tax (Rate) dated 28-6-2017 read with the corrigendum dated 30-6-2017. [In Re: Laurus Labs Ltd.  2018 (6) TMI 460 - AUTHORITY FOR ADVANCE RULING-ANDHRA PRADESH ; ].

Advance Ruling on classification of goods (lime stone slabs)

The applicant sought advance ruling in respect of classification of "processed/polished limestone slabs" with a submission that the said goods are correctly classifiable under Chapter 25 of the GST Tariff.

According to the Explanatory Notes given for headings 25.15, 25.16 and 25.21, stones which are roughly trimmed or merely cut by sawing or otherwise into blocks or slabs of a rectangular shape are classifiable under headings 25.15 or 25.16 and the blocks or slabs which have undergone the process of polishing are not classifiable under these headings.

The applicant stated that their main activity is to bring rough lime stone slabs to their processing unit and polishing one of the suitable surface with simple table polish machine and further cut it to square or rectangular shape on a table cutting machine. Since the stones which have undergone the process of polishing are not classifiable under Chapter 25, Explanatory notes to heading 68.02 are to be considered.

A complete reading of the explanatory notes clearly specifies that limestone slabs which have undergone the processes of cutting and polishing and which have been worked beyond the stage of the normal quarry products of Chapter 25 are correctly classifiable under heading 68.02 of the Customs Tariff as per the Harmonized Commodity Description and Coding System. As the rules for Interpretation of Customs Tariff are made applicable to GST Tariff and General rules for Interpretation of the Schedule, it was ruled that the "Polished/Processed limestone slabs" are correctly classifiable under heading 6802 of the GST Tariff. [In Re: Maheshwari Stone Supplying Co. 2018 (6) TMI 458 - AUTHORITY FOR ADVANCE RULING HYDERABAD TELANGANA ].

Advance ruling on taxability of supply of ready mix concrete to SEZ

The assessee made application before Authority for Advance Ruling and sought for clarification for the rate of tax to be applicable on “Ready Mix Concrete” supplied to SEZ and also on whether the Input Tax Credit can be claimed for raw material purchased to produce ready mix concrete for the said supplies.

The Authority for Advance Ruling ruled that since it has been also clarified in ACAAR No. 15/2014-15, dated 22-6-2015 in Acts Cell-II/13885/2015 and ACAAR No. 16/2014-15, dated 22-6-2015 in Acts Cell-II/13886/2015 that sale of Electrical goods for the execution of Works contract in SEZ unit is exempt from tax as per terms and conditions laid down in G.O. Ms. No. 193, dated 30-12-2006, the “Supply of Ready Mix Concrete to SEZ” is exempted from tax as per the terms and conditions laid down in G.O. Ms. No. 193, dated 30-12-2006. [In Re: TVL. RMC Readymix (India) 2018 (6) TMI 173 - AUTHORITY FOR ADVANCE RULING - TAMIL NADU ]

 (Some more to follow …..)