2021 (10) TMI 53 - AAAR - GST

Classification of GST - Rate of GST - Biomass Fired (Steam) Boilers - Agro Waste Thermic Fluid Heater - applicability of Sl. No. 234 of Schedule I to Notification No. 01/2017- Central Tax (Rate) dated 28.06.2017 - HELD THAT - The phrase Waste to Energy Plants denotes a particular meaning. The said phrase refers to the plants for recovery of energy in the form of Biogas / BioCNG / Electricity from agricultural, industrial and urban wastes of renewable nature such as municipal solid wastes (MSW), vegetable and other market wastes, etc. Therefore, the approach of referring to the dictionary meaning of each of the terms Waste , Energy and Plant separately, as suggested by the appellant, would not be correct approach to understand the true meaning of the phrase Waste to energy plants / devices used at clause (e) of Entry at Sl. No. 234 of Schedule I of Notification No. 1/2017-Central Tax (Rate) - the products Biomas Fired (Steam) Boilers, Agro Waste Thermic Fluid Heater of the appellant are admittedly not Waste to Energy Plants in the aforesaid sense of the said phrase used in the Notification No. 1/2017-Central Tax (Rate). The products Biomas Fired (Steam) Boilers, Agro Waste Thermic Fluid Heater of the appellant in itself do not conform to the above description of the Waste to Energy Plant submitted by the appellant inasmuch as the steam boiler is stated to be a power generation device, used for generating steam by applying the heat energy to water whereas it is stated that the coil heats the thermal oil or fluid that is pumped through the thermal oil boiler and the thermal oil heats coil in various types of heat users - In case the products of the appellant are required in the setting up of the Waste to Energy Plants , the same may still fall under aforesaid Entry at Sl. No. 234, however, neither the appellant has claimed so, nor has any evidence been brought on record in this regard. The products Biomass Fired (Steam) Boilers, Agro Waste Thermic Fluid Heater of M/s. Isotex Corporation Pvt. Ltd. are not covered under Entry at Sl. No. 234 of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 1/2017-State Tax (Rate) dated 30.06.2017 but are covered under Entry at Sl. No. 310 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 1/2017-State Tax (Rate) dated 30.06.2017 attracting Goods and Services Tax @ 18% - Appeal rejected.

Summary

Issues Involved:
1. Classification and rate of tax payable for Agro Waste Thermic Fluid Heater or Biomass Fired Boilers.
2. Applicability of Sl. No. 234 of Schedule I of Notification No. 01/2017-Central Tax (Rate) for the appellant's products.
3. Determination of whether the appellant's products qualify as "Waste to Energy Plant/Device."

Detailed Analysis:

1. Classification and Rate of Tax Payable:
The appellant sought an advance ruling on the classification and rate of tax for Agro Waste Thermic Fluid Heater or Biomass Fired Boilers. The GAAR classified these under heading 8402 19 19 of the First Schedule to the Customs Tariff Act, 1975, attracting 9% CGST + 9% SGST or 18% IGST as per Sr. No. 310 of Schedule III of Notification No. 01/2017-Central Tax (Rate).

2. Applicability of Sl. No. 234 of Schedule I of Notification No. 01/2017-Central Tax (Rate):
The appellant contended that their products should be taxed at a concessional rate of 5% GST under Sl. No. 234 of Schedule I of Notification No. 01/2017-Central Tax (Rate), as they are renewable energy devices using biomass/agro waste as fuel. The GAAR observed that the appellant did not provide sufficient evidence regarding the fuel used in their products and found that the products listed on the appellant's website used conventional fuels like coal and lignite. Therefore, GAAR ruled that the products attract 18% GST.

3. Determination of Whether the Appellant's Products Qualify as "Waste to Energy Plant/Device":
The appellant argued that their products should be classified under "Waste to Energy Plant/Device" as per clause (e) of Entry No. 234 of Schedule I of Notification No. 01/2017-Central Tax (Rate). They provided definitions and explanations of how their products generate energy from waste. However, the GAAR and the appellate authority found that the appellant's products do not meet the specific criteria for "Waste to Energy Plant/Device" as defined in various government notifications and policies. The phrase "Waste to Energy Plant/Device" refers to plants that recover energy in the form of Biogas, BioCNG, or electricity from waste, which does not align with the appellant's products that generate heat and steam.

The appellate authority upheld GAAR's ruling, confirming that the appellant's products do not qualify for the concessional GST rate under Entry No. 234 of Schedule I. Instead, they are classified under Entry No. 310 of Schedule III, attracting 18% GST.

Conclusion:
The appellate authority confirmed the GAAR's ruling that the products Biomass Fired (Steam) Boilers and Agro Waste Thermic Fluid Heater are not covered under Entry at Sl. No. 234 of Schedule I of Notification No. 01/2017-Central Tax (Rate). They are instead classified under Entry at Sl. No. 310 of Schedule III, attracting 18% GST. The appeal was rejected.