2019 (10) TMI 208 - AAAR - GST

Condonation of delay in filing appeal - Classification of goods - Kalva raksha sutra - present appeal is against the ruling in as much as the original authority has stated that the product manufactured by the appellant is not Kalava Raksha sutra but skeins of braided yarn of various compositions - appeal was filed beyond statutory limit - HELD THAT - As per proviso to Section 100(2), the Appellate Authority if satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the appeal period of thirty days can allow it to be presented within a further period not exceeding thirty days. In the case at hand, the appeal is filed within the statutory period though incomplete which has been made good within the further period of thirty days provided in the said proviso. Hence the lacuna is condoned and the appeal is taken up on merits. Classification of goods - Kalva raksha sutra - HELD THAT - In the case at hand the appellant is not aggrieved with the ruling of the Lower authority but aggrieved with the remarks of the lower authority in Para 4 of the Ruling of the authority, which according to them affect their entitlement to the exemption under Notification No. 2/2017-C.t.(Rate) dated 28.06.2017 as amended. We find that the lower authority has not observed/ruled on the eligibility of exemption to their product in the Ruling under appeal. We also find that the Lower Authority has ruled on the classification of the product manufactured by the appellant, which is not under dispute, therefore as per the provisions of Section 100(1) of the CGST/TNGST Act, 2017 no appeal, per se lies before this Authority. It is further clear that the issue dealt with was not whether the product manufactured by the appellant is Kalava or not or for that matter, the ruling do not delve on what makes a kalava and how the product is not a kalava . In as much as the issue raised before the lower authority do not involve the above and factually the lower authority has not dealt with the above, we find justice best served by expunging of the above remarks of the lower authority in the ruling. The remarks of the lower authority may be treated as expunged/deleted - The ruling of the Lower authority is maintained.

Summary

Issues Involved:
1. Classification of the commodity 'Kalava Raksha Sutra (Sacred Thread)'.
2. Eligibility for GST exemption under Notification No. 2/2017-C.T.(Rate) dated 28.06.2017.
3. Procedural compliance regarding the filing of the appeal.

Detailed Analysis:

1. Classification of the Commodity 'Kalava Raksha Sutra (Sacred Thread)':
The Appellant is engaged in manufacturing 'Kalava Raksha Sutra' and sought an advance ruling on its classification. The Original Authority for Advance Ruling classified the product as braided textile yarns under the following HSN codes:
- Made of polypropylene yarn: 56074900
- Made of other synthetic yarn: 56075090
- Made of cotton: 56079090

The Original Authority concluded that the product was not 'Kalava Raksha Sutra' sold directly to consumers but rather long lengths of thread sold in loose rolls, which required further cutting to individual sizes to make them 'Kalava Sutra'.

2. Eligibility for GST Exemption:
The Appellant contested the Original Authority's ruling, arguing that the product should fall under serial number 148 under item IX under the head 'Pooja Samagiri' in Notification No. 2/2017-C.T.(Rate), thereby exempt from GST. They emphasized the religious significance of 'Kalava Raksha Sutra', which is used in various religious practices and should be considered exempt from GST despite being sold in bulk and later cut to size by buyers.

3. Procedural Compliance:
The appeal was filed within the statutory period but initially lacked the full statutory fees, which were subsequently paid within the allowable extended period. The Appellate Authority condoned this procedural lapse and accepted the appeal on merits.

Personal Hearing and Further Submissions:
The Appellant was granted multiple opportunities for a personal hearing. During the hearings, they presented samples, tax invoices, and argued that the product's classification was not in dispute but rather its eligibility for exemption. They highlighted the traditional and religious usage of 'Kalava Sutra' and provided additional submissions emphasizing their long-standing family business of manufacturing these items for religious purposes.

Appellate Authority's Decision:
The Appellate Authority noted that the Original Authority's ruling focused on the classification of the product and did not explicitly address the exemption eligibility under Notification No. 2/2017-C.T.(Rate). The Appellate Authority found that the remarks of the Original Authority regarding the product not being 'Kalava Raksha Sutra' were not substantiated with material evidence and were not relevant to the classification issue.

Ruling:
The Appellate Authority decided to expunge the remarks made by the Original Authority in Para 4 of its Order No. 12/AAR/2019 dated 13.04.2019, which implied that the product was not 'Kalava Raksha Sutra'. The classification ruling by the Original Authority was maintained, but the remarks affecting the exemption eligibility were deleted to ensure justice.

Conclusion:
The Appellate Authority maintained the classification of the product as braided textile yarns under the specified HSN codes but expunged the remarks that could affect the product's eligibility for GST exemption under the relevant notification. This decision clarified that the product's classification did not preclude its consideration for exemption based on its religious significance and usage.