2018 (7) TMI 142 - AAR - GST

Rate of tax - nature of use - marine propeller, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings, used in fishing / floating vessels - applicant is 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 1/17 - Held that - The classification of the commodities under Entry 252 solely depends on the nature of use to which the commodities are put to - commodities such as marine propellers, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings used only for the purposes of fishing / floating vessels would be taxable @ 5%. If the said commodities are used for some other purpose, then the applicable tax rate would be 18%. Ruling - 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 N/N. 01/2017 Central Tax (Rate) dated 28.06.2017 and State N/N. 360/2017 dated 30.06.2017 and hence taxable @ 5% SGST-2.5%; CGST - 2.5% .

Summary

Issues:
Rate of tax applicable to marine propellers, rudder set, stern tube set, propeller shaft, and M.S. Shaft for couplings used in fishing/floating vessels.

Analysis:
The applicant sought an Advance Ruling on the tax rate applicable to various commodities used in fishing/floating vessels. The applicant argued that since the products are primarily used for fishing and allied activities, they should be taxed at 5% under specific entries in the Central Notification 1/17. The Authority examined the application and decided to admit it based on the contentions raised by the applicant during the personal hearing.

Regarding the tax rate, the HSN specified in the application indicated an 18% tax rate for the mentioned commodities. However, it was highlighted that parts of fishing vessels and other related vessels are taxed at 5% under entry 252 of the 1st schedule of SRO 360/2017. This entry encompasses goods like fishing vessels and factory ships, indicating that the tax rate classification depends on the intended use of the commodities.

The Authority determined that commodities like marine propellers, rudder set, stern tube set, propeller shaft, and M.S. Shaft for couplings used solely for fishing/floating vessels should be taxed at 5%. In contrast, if these commodities are utilized for other purposes, the tax rate applicable would be 18%. Therefore, the ruling clarified that these commodities, when part of fishing/floating vessels, fall under Entry 252 of the relevant notifications, making them subject to a 5% tax rate split between SGST and CGST.