2021 (8) TMI 354 - AAR - GST

Classification of goods - rate of GST - supply of tissue papers - covered under serial No. 112 of Schedule II of the Rate N/N. 01/2017 Central Tax (R) taxable at the rate of 12% or otherwise? - HELD THAT - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 notifies the rate of central tax in terms of schedules appended to the notification, that shall be levied on intra-state supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said schedules, falling under the tariff item, sub-heading, heading or Chapter as the case may be, as specified in the corresponding entry in column (2) of the said notification. Thus the goods covered under the description of particular entry number of a particular schedule, that fall under the corresponding chapter heading/sub-heading only attract the rate specified under the respective schedule - thus, the goods must be falling under HSN 4802 and must tally with the description specified therein to attract the central tax of 6% specified in the respective schedule II. It is clearly evident from the description that GST rate of 12% is applicable only to Uncoated paper and paperboard used for writing, printing or other graphic purposes; non perforated punch-cards and punch tape paper, in rolls or rectangular/square sheets, of any size; hand-made paper and paperboard. Further the paper of heading 4801 and 4803 are excluded from the heading 4802. The impugned products being the tissue papers fall under other paper and paperboard not containing fibres obtained by a mechanical or chemi-mechanical process and hence do not get covered under uncoated paper and paperboard. Therefore the impugned products of the applicant are not covered under the entry No. 112 of Schedule II to Notification supra and hence the GST rate of 12% is not applicable to them.

Summary

Issues:
Classification of tissue papers under GST Schedule II for tax rate determination.

Detailed Analysis:
1. Admissibility of the application: The issue involves the classification of the product under "classification of any goods or services or both," making it admissible under Section 97(2)(a) of the CGST Act 2017.

2. Applicant's Facts: The applicant, a tissue paper manufacturer, produces various types of tissue papers like facial tissues, kitchen towels, toilet rolls, and napkins. They use raw materials such as wood pulp, waste paper, and chemicals for manufacturing.

3. Pre-GST Period: The applicant availed concessional central excise duty rates during the pre-GST period. However, post-GST implementation, they classify their products under HSN 4803, discharging GST at 18%.

4. Applicant's Interpretation of Law: The applicant argues that their tissue papers fall under HSN 4802, attracting a 12% GST rate as per Notification No. 1/2017-Central Tax (Rate). They claim that tissue paper not containing specific fibers should be classified under HSN 4802.

5. Findings & Discussion: The authority analyzed the applicant's products against the description provided in the notification. It was concluded that the tissue papers did not align with the specified description under entry number 112 of Schedule II, hence not qualifying for the 12% GST rate.

6. Conclusion: The ruling stated that the supply of tissue papers by the applicant does not fall under entry number 112 of Schedule II, thereby not subject to the 12% GST rate specified in the notification.

This detailed analysis covers the admissibility of the application, the applicant's facts and interpretation, pre-GST practices, the authority's findings, and the final ruling on the classification of tissue papers for tax rate determination under GST.