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2023 (9) TMI 764 - AAR - GSTClassification of goods - Tapioca flour obtained by crushing the dried roots, and remnants of tapioca roots/tubers - entry No. 78 and Tariff item 1106 of Part A of Exempted goods, and tariff item 1106 in SI. No. 59 of Part C in Schedule I of the said Act - such trader/ dealer is required to be registered or not - HELD THAT - The tariff heading 1106 includes Flour, meal and powder of the dried leguminous vegetables of heading 0713 and of sago or of roots or tubers of heading 0714. Therefore, it is clear that this HSN is related to flour directly prepared by grinding dried leguminous vegetables, tubers without involving any other processing. The impugned product is prepared by drying and grinding the wet residue which is nothing but the fibrous substances retained in the sieve, while extracting/filtering wet milk from grinded tapioca roots. Hence, it is understood that, segregating fibre/residue is an integral part of the starch manufacturing process. Though, the applicant and other dealers in similar trade line described it as tapioca flour, the commodity dealt with by the applicant more clearly fits into the specific description Residues of starch manufacturing and similar residues, (HSN 2303.10) - as per the dealers contention also this product is not fit for human consumption and it is actually used as animal feed and in manufacturing of adhesives. But, the goods classified under tariff head 1106 are meant for human consumption. The product dealt with by the applicant is classifiable under the tariff head 2303.10, Residues of starch manufacturing and similar residues, taxable @ 5%. Requirement of registration - HELD THAT - In terms of Section 22 of the CGST Act, read with relevant provisions of SGST Act, the applicant is liable to be registered, if his aggregate turnover in a financial year exceeds the prescribed turnover under GST Law.
Issues Involved:
1. Classification of goods (Tapioca flour). 2. Applicability of Notifications under the Act. 3. Determination of tax liability. 4. Requirement for trader/dealer registration. Issue 1: Classification of Goods The applicant sought classification for Tapioca flour obtained by crushing dried roots and remnants of tapioca roots/tubers. The applicant contended that the product falls under HSN code 1106, which pertains to flour, meal, and powder of dried leguminous vegetables, sago, or roots/tubers of heading 0714, and argued for a 'Nil' tax rate as the product is sold without any brand name. However, the Authority determined that the product is a residue from the starch manufacturing process, not directly prepared from tapioca root tuber. Thus, it is classifiable under HSN 2303.10, "Residues of Starch manufacture and similar residues," taxable at 5%. Issue 2: Applicability of Notifications The applicant referenced Notifications No. 02/2017 and 28/2017 to claim tax exemption for unbranded tapioca flour. However, the Authority concluded that these notifications are inapplicable as the product does not fall under the exempted category of HSN 1106 but under HSN 2303.10, which is taxable. Issue 3: Determination of Tax Liability The applicant's product, classified under HSN 2303.10, is liable to tax at 2.5% under the CGST Act and 2.5% under the SGST Act, as per SI. No. 104 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017/G.O.Ms.No.62, CTR, dated 29-6-2017. Issue 4: Requirement for Trader/Dealer Registration In terms of Section 22 of the CGST Act, the applicant is required to be registered if their aggregate turnover in a financial year exceeds the prescribed threshold under GST Law. Ruling: 1. Classification of Goods: The product is classifiable under HSN 2303.10, "Residues of Starch manufacture and similar residues," liable to tax at 2.5% under the CGST Act and 2.5% under the SGST Act. 2. Applicability of Notifications: The referenced notifications are not applicable to the applicant's product. 3. Tax Liability: The product is taxable at 5% (2.5% CGST + 2.5% SGST). 4. Registration Requirement: The applicant is liable to be registered under Section 22 of the GST Act if their turnover exceeds the prescribed threshold.
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