2019 (5) TMI 1039 - AAR - GST

Classification of goods - parts of sprinkler system sold by us like Latch Clamp, C-Clamp, Foot Batten, Riser Pipe, Aluminum Rivet and Mini Sprinkler Rod etc. exclusively meant for use in Sprinklers and drip irrigation system but sold in isolation as parts and not as a complete system - whether classified under the heading 8424? - rate of tax when such components/ parts when sold separately and not as a part of the sprinkler/ drip irrigation. HELD THAT - While going through the Entry No. 195B of Schedule II of Notification No.01/2017 dated 28.06.2017 read with Circular number 81/55/2018-GST dated 31st December, 2018, we observe that the Sprinkler Irrigation System including laterals only will be covered under the said notification and attract GST @ 12% - If individual metal parts of the Sprinkler Irrigation System/ drip irrigation system are supplied separately viz. Latch Clamp, C- Clamp, Foot Batten, Riser Pipe, Aluminum Rivet and Mini Sprinkler Rod etc. will not be covered under Entry No. 195B of Schedule II of Notification No. 01/2017 dated 28.06.2017.

Summary

Issues: Classification of goods under GST - Applicability of tax rate on individual components of sprinkler system

Analysis:

Issue 1: Classification of Goods

The applicant, engaged in manufacturing/trading metal parts for sprinkler systems, sought clarification on the tax rate applicable to individual components like Latch Clamp, C-Clamp, Foot Batten, Riser Pipe, Aluminum Rivet, and Mini Sprinkler Rod. The applicant contended that these parts, exclusively for use in sprinkler systems, should not be taxed at the rate applicable to complete systems under heading 8424.

Applicant's Submission:

The applicant highlighted that the parts are specifically designed for sprinkler/drip irrigation systems and are sold to entities involved in manufacturing sprinkler systems or using them. They referenced Circular No. 81/55/2018-GST, which clarified that sprinkler systems, including components like laterals, attract a 12% GST rate.

Jurisdictional Officer's Comments:

The officer opined that the items mentioned by the applicant fall under heading 84249000 as components of sprinkler/drip irrigation, subject to a 12% tax rate.

Findings and Conclusion:

The Authority observed that the applicant deals with metal components for sprinkler systems, which typically include a pump unit, tubings, sprinkler heads, and other accessories. Referring to Entry No. 195B of Schedule II of Notification No. 01/2017 and Circular No. 81/55/2018-GST, the Authority determined that individual metal parts sold separately do not fall under the mentioned entry and are not taxable at the 12% rate applicable to complete sprinkler systems.

Ruling:

The metal parts manufactured and supplied by the applicant are not covered under Entry No. 195B of Schedule II of Notification No. 01/2017 dated 28.06.2017. Hence, they are not subject to the 12% GST rate applicable to complete sprinkler systems.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by the applicant, the officer's comments, and the final ruling by the Authority for Advance Ruling in Rajasthan.