Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 47th meeting held on 28th-29th June, 2022 at Chandigarh - GST - States - 18/2022-TNGST

GOVERNMENT OF TAMIL NADU COMMERCIAL TAXES DEPARTMENT OFFICE OF THE COMMISSIONER OF COMMERCIAL TAXES EZHILAGAM, CHENNAI- 600 005 PRESENT: THIRU. DHEERAJ KUMAR I.A.S, PRINCIPAL SECRETARY/ COMMISSIONER OF STATE TAX Circular No.18/2022 - TNGST (PP6/GST/145/2022) Date: 27.09.2022 Sub: Clarification regarding GST rates classification (goods) based on the recommendations of the GST Council in its 47th meeting held on 28th-29th June, 2022 at Chandigarh -reg. Ref: Circular No. 179/11/2022-GST, dated 03.08.2022 issued by Ministry of Finance, Department of Revenue, Government of India, CBIC, New Delhi. In the reference cited, the CBIC, Department of Revenue, Ministry of Finance, Government of India, New Delhi, has issued Circular No. 179/11/2022-GST, dated 03.08.2022 on the recommendations of the GST Council. Hence, following pari materia circular is issued: - Based on the recommendations of the GST Council in its 47th meeting held on 28th-29th June at Chandigarh, clarifications, with reference to GST levy, related to the following are being issued through this circular: 2. Electric vehicles whether or not fitted with a battery pack, attract GST rate of 5%: 2.1. Representations have been received seeking clarification regarding the applicable rate of GST on electrically operated vehicle without any battery fitted to it. 2.2. The explanation of Electrically operated vehicles in entry 242A of Schedule I of Tamil Nadu Notification No II(2) /CTR/532(d-4)/2017, dated 29.06.2017 [Issue No. 202] reads as: Electrically operated vehicles which run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include E-bicycles. 2.3. As is evident from the explanation above, electrically operated vehicle including three wheeled electric vehicle means vehicle that runs solely on electrical energy derived from an external source or from electrical batteries. Therefore, the fitting of batteries cannot be considered as a concomitant factor for defining a vehicle as an electrically operated electric vehicle. 2.4. It is also pertinent to state that the WCO s HSN Explanatory notes have also not considered batteries to be a component, whose absence changes the essential character of an incomplete, unfinished or unassembled vehicle. 2.5. Also, the HSN explanatory notes for Chapter 87 have clearly stated that Motor Chassis fitted with cabs i.e. the chassis fitted with cabin body falls under 87.02 to 87.04 and not in heading 87.06. 2.6. In view of the above, it is clarified that electrically operated vehicle is to be classified under HSN 8703 even if the battery is not fitted to such vehicle at the time of supply and thereby attract GST at the rate of 5% in terms of entry 242A of Schedule I of Tamil Nadu Notification No II(2) /CTR/532(d-4)/2017, dated 29.06.2017. [Issue No. 202] 3. Stones otherwise covered in S. No. 123 of Schedule-I (such as Napa stones), which are not mirror polished, are eligible for concessional rate under said entry: 3.1. Representations have been received seeking clarification regarding the applicable GST rates on building stones, in particular Napa Stones, which are ready to use and polished in ways other than mirror-polished. 3.2. Napa Stone is a variety of dimensional limestone, which is a brittle stone and cannot be subject to extensive mirror polishing. Currently, SI. No. 123 of Schedule-I prescribes GST rate of 5% for Ecaussine and other calcareous monumental or building stone; alabaster [other than marble and travertine], other than mirror polished stone which is ready to use. However, being brittle in nature, stones like Napa Stone, even though ready for use, are not subject to extensive polishing. Therefore, such minor polished stones do not qualify as mirror polished stones. 3.3. Therefore, it is clarified that SI. No. 123 in Schedule-I to the Tamil Nadu Notification No. II(2) /CTR/532(d-4)/2017, dated 29.06.2017 [Issue No. 202] covers minor polished stones. 4. Mangoes under CTH 0804 including mango pulp, but other than fresh mangoes and sliced, dried mangoes, attract GST at 12% rate: 4.1. Representations have been received seeking clarification regarding the applicable GST rate on different forms of Mangoes including Mango Pulp. 4.2. On the basis of the recommendation of the GST Council in its 22nd Meeting, the GST rate on Mangoes sliced, dried , falling under heading 0804, was reduced from 12% to 5% (SI. No. 30A of schedule I of Tamil Nadu Notification No. II(2)/CTR/532(d-4)/2017, dated 29.06.2017 [Issue No. 202]). However, the GST rate on all forms of dried mangoes (other than sliced and dried mangoes), falling under heading 0804, including mango pulp, was always meant to be at the rate of 12%. 4.3. Accordingly, it is hereby clarified that mangoes, fresh falling under heading 0804 are exempt; Mangoes, sliced and dried, falling under 0804 are chargeable to a concessional rate of 5%; while all other forms of dried mango, including Mango pulp, attract GST at the rate of 12%. To bring absolute clarity, the relevant entry at Sl. No. 16 of Schedule II of Tamil Nadu Notification No. II(2)/CTR/532(d-4)/2017, dated 29.06.2017 [Issue No. 202] has been amended vide Notification No. II(2)/CTR/609(b-1)/2022, dated 22.07.2022 [Issue No 403]. 4.4. Fresh mangoes, falling under heading 0804, continue to remain exempt from GST vide Tamil Nadu Notification No. II(2)/CTR/532(d-5)/2017, dated 29.06.2017 [Issue No. 202] 5. Treated sewage water attracts Nil rate of GST: 5.1. Representations have been received seeking clarification regarding the applicable GST rate on treated sewage water. Treated sewage water was not meant to be construed as falling under purified water for the purpose of levy of GST. 5.2. In general, Water, falling under heading 2201, with certain specified exclusions, is exempt from GST vide entry at SI. No. 99 of Tamil Nadu Notification No.II(2)/CTR/532(d-5)/2017, dated 29.06.2017 [Issue No. 202] 5.3. Accordingly, it is hereby clarified that supply of treated sewage water, falling under heading 2201, is exempt under GST. Further, to clarify the issue, the word purified is being omitted from the above-mentioned entry vide Notification No. II(2)/CTR/609(b-5)/2022, dated 22.07.2022 [Issue No. 403] 6. Nicotine Polacrilex Gum attracts a GST rate of 18%: 6.1. Representations have been received seeking clarification regarding the classification and applicable GST rate on Nicotine Polacrilex gum. 6.2. The WCO 2022 HS Codes has inter alia introduced a new entry 2404 91 00 comprising of products for oral application containing nicotine and intended to assist tobacco use cessation with effect from 01.01.2022. Accordingly, a technical change, without any consequential rate change, has been made vide Notification No. II(2)/CTR/609(b-1)/2022, dated 22.07.2022 [Issue No 403] wherein SI. No. 26B in Schedule III of Notification No.II(2)/CTR/532(d-4)/2017, dated 29.06.2017 [Issue No. 202] has been inserted to include products for oral application containing nicotine and intended to assist in cessation of use of tobacco, and falling under tariff item 2404 91 00. The same is supplemented by the HS Explanatory notes 2022 which states that heading 2404 includes nicotine containing products for recreational use, as well as nicotine replacement therapy (NRT) products intended to assist tobacco use cessation, which are taken as part of a nicotine intake reduction programme in order to lessen the human body s dependence on this substance. 6.3. Accordingly, it is hereby clarified that the Nicotine Polacrilex gum which is commonly applied orally and is intended to assist tobacco use cessation is appropriately classifiable under tariff item 2404 91 00 with applicable GST rate of 18% (SI. No. 26B of Notification No.II(2)/CTR/532(d-4)/2017, dated 29.06.2017 [Issue No. 202]) 7. Fly ash bricks and aggregate - condition of 90% fly ash content applied only to fly ash aggregate, and not fly ash bricks: 7.1. Representations have been received seeking clarification regarding the applicable rate on the fly ash bricks and fly ash aggregates. 7.2. Hitherto, as per entry at SI. No. 176B of the Schedule II the items of description Fly ash bricks or fly ash aggregate with 90 per cent or more fly ash content; Fly ash blocks attracts a GST rate of 12%. Confusion has arisen about the applicability of 90 per cent condition on fly ash aggregates and fly ash bricks. As per the recommendations of the GST Council in the 23rd Meeting, the condition of 90% or more fly ash content was applicable only for fly ash aggregate. 7.3. Therefore, it is clarified that the condition of 90 per cent or more fly ash content applied only to Fly Ash Aggregates and not to fly ash bricks and fly ash blocks. Further, with effect from 18th July, 2022 the condition is omitted from the description. 8. Applicability of GST on by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi: 8.1. Representations have been received seeking clarification regarding the applicable GST rate on by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi. 8.2. The by-products of milling of pulses/ dal such as Chilka, Khanda and Churi are appropriately classifiable under heading 2302 that consists of goods having description as bran, sharps and other residues, whether or not in the form of pellets, derived from thesifting, milling or other working of cereals or of leguminous plants. 8.3. The applicable GST rate on goods falling under heading 2302 is detailed in the Table below: Entry and notification No. Description GST Rate SI.No. 102 of Notification No. II(2)/CTR/532(d-5)/2017, dated 29.6.2017 [Issue No. 202] Aquatic feed including shrimp feed and prawn feed, poultry feed cattle feed, including grass, hay straw, supplement husk of pulses, concentrates additives, wheat bran de-oiled cake[other than rice bran] Nil SI. No.103A of Schedule - I of Notification No II(2)/CTR/532(d-4)/2017,dated 29.06.2017. [Issue No. 202] Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants [other than aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and husk of pulses, concentrates and additives, wheat bran and de-oiled cake] 5% SI. No.103B of Schedule - I of Notification No II(2)/CTR/532(d-4)/2017,dated 29.06.2017. [Issue No. 202] [Issue No. 202] Rice bran (other than de-oiled rice bran) 5% 8.4. The dispute in applicable GST rate revolves around the central argument as to whether the above-mentioned by-products are meant for direct consumption as cattle feed and therefore attract exemption under SI. No. 102 of Notification No.II(2)/CTR/532(d-5)/2017, dated 29.06.2017 [Issue No.202] or otherwise not meant for direct consumption and thus covered under SI .No. 103A of Notification No II(2) /CTR/532(d-4)/2017, dated 29.06.2017 [Issue No. 202] attracting a GST rate of 5%. 8.5. While milling of pulses/ dal, a wide range of by-products such as chilka, khanda, churi, among others, are obtained which are preferred as cattle feed by dairy industry for better palatability and higher nutritive value. The mentioned by-products are required to go through varying degrees of processing in order to customize the color, size, aroma, nutrition, purity, etc., of the cattle feed so produced, depending upon the dietary and nutritional requirement of the cattle and the budget availability of the customer(s). Further, as per the Indian Standards 2052:2009 -Compounded Feeds for Cattle -Specification, issued by the Bureau of Indian Standards, Ministry of Consumer Affairs, Food Public Distribution, Government of India, grain by products have been categorized as one of the ingredients of the compounded cattle feed. 8.6. The GST Council examined the issue and recommended that a clarification be issued in this regard. It also recommended that in view of the prevailing multiple interpretations and genuine doubts regarding the applicability of GST, the issue for past periods may be regularized on as is basis. 8.7. Accordingly, it is hereby clarified that the subject goods which inter alia is used as cattle feed ingredient are appropriately classifiable under heading 2302 and attract GST at the rate of 5% vide SI. No. 103A, Schedule-I of Notification No II(2) /CTR/532(d-4)/2017, dated 29.06.2017. [Issue No. 202] and that for the past, the matter would be regularised on as is basis as mentioned in para 8.6. Sd/-Dheeraj Kumar Principal Secretary/ Commissioner of State Tax