2021 (9) TMI 1059 - AAR - GST

Classification of goods - Ammonium Sulphate - product having agricultural as well as non-agricultural use - eligibility to avail the benefit of charging concessional rate of GST of 5% - outward supply of product for the purpose of agriculture - Rate of GST on outward supply of product for the purpose of non-agriculture - to be charged @ 18% or otherwise? - maintainability of application - HELD THAT - Revenue maintains that subject application cannot be admitted. However, there are no deficiency in the said application and find it fit to be admitted. There is specific entry for Ammonium sulphate at CTH 310221. As per HSN Explanatory Notes, Ammonium Sulphate, whether used as fertiliser or not, is to be classified at CTH 310221 - the applicant is a wholesale supplier, as per its submission. Thus, Ammonium Sulphate is classifiable at HSN 310221 - GST of 5% is leviable on Ammonium Sulphate supplied for direct use as fertilizers or used in the manufacturing of complex fertilizers for agricultural use (soil or crop fertilizers) - GST of 18% is leviable on Ammonium Sulphate supply for other than fertilizer use.

Summary

Issues Involved:
Classification of product under HSN 3102, eligibility for concessional GST rate of 5% on outward supply for agriculture, GST rate on outward supply for non-agriculture.

Classification of Product under HSN 3102:
The applicant, a supplier of Ammonium Sulphate, sought an Advance Ruling on the correct classification of the product under HSN 3102. The applicant submitted that the product has both agricultural and non-agricultural uses. They compared the product composition with specific HSN entries under Notification No.1/2017-Central Tax (Rate) and argued that their product falls under Chapter 31 having tariff item 3102. The applicant cited Circular No.54/28/2018-GST to support their interpretation. The Revenue contended that the activity is already classified under Chapter 31 of the Customs Tariff Act, covering fertilizers. However, the Authority found the application fit for admission and proceeded with the analysis.

Eligibility for Concessional GST Rate for Agriculture:
The applicant also sought clarification on whether they are eligible for the benefit of charging a concessional GST rate of 5% on outward supplies of the product for agricultural purposes. The Authority considered the specific entry for Ammonium Sulphate at CTH 310221 and referred to the HSN Explanatory Notes, which classified Ammonium Sulphate at CTH 310221, whether used as a fertilizer or not. The Authority noted that the applicant is a wholesale supplier and examined Notification 1/2017- CT(R) and a CBIC Circular dated 9-8-18. Ultimately, the Authority ruled that GST at 5% is applicable on Ammonium Sulphate supplied for direct use as fertilizers or for manufacturing complex fertilizers for agricultural purposes.

GST Rate on Outward Supply for Non-Agriculture:
The applicant also inquired about the GST rate applicable on outward supply of the product for non-agricultural purposes. The Authority concluded that GST at 18% is leviable on Ammonium Sulphate supplied for uses other than fertilizers. The ruling clarified the classification of Ammonium Sulphate under HSN 310221 and the corresponding GST rates based on the purpose of supply, distinguishing between agricultural and non-agricultural uses. The decision provided clarity on the applicable GST rates for different types of product usage, ensuring compliance with tax regulations.