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TMI Blog2022 (11) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... under GST law. In the GST Acts, Section 9 (1) of the CGST/KGST Act and Section 5(1) of the IGST Act, creates a charge for the levy of GST on intra-state and inter-state supplies respectively, at the rates which are notified by the Government on the recommendations of the GST Council. Accordingly, the rate of GST applicable to the goods classified under the Customs Tariff Act has been notified vide Notification No 01/2017 Central Tax (Rate) dated 28-06-2017 (for intra-state supplies) and Notification No 01/2017 Integrated Tax (Rate) dated 28-06-2017 (for inter-state supplies). The scope of the entry Sl.No 142 of exemption notification is confined only to hearing aids under heading 9021 and does not include parts and accessories of hearing aids falling under tariff item 9021 90 10. We therefore, dismiss the argument of the Appellant that entry Sl.No 142 of exemption notification which specifies the goods at four-digit heading level should be read to include all sub-heading and tariff item level goods i.e parts and accessories of hearing aids. Parts and accessories of hearing aids are neither covered in the scope of entry Sl.No 221 of Schedule II at 12% tax nor are they covered u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 2017 and Karnataka Goods and Service Tax Act 2017 (herein after referred to as CGST Act, 2017 and SGST Act, 2017) by M/s Sivantos India Pvt Ltd, No 78, 4th Floor, Salarpuria Sattva Magnificia - Phoenix, Near Tin Factory, Old Madras Road, Doorvani Nagar, Bengaluru Urban, 560016 (herein after referred to as Appellant) against the Advance Ruling order No. KAR ADRG 27/2022 dated 12th August 2022. Brief Facts of the case: 3. The Appellant is engaged in the business of trading of hearing aids and their parts and accessories. Hearing aids are classifiable under HSN 9021 40 90 and are exempt from GST by virtue of Sl.No 142 of Notf No 2/2017 CT (Rate) dated 28-06-2017. The parts and accessories supplied by the Appellant are imported from the manufacturer and supplied for use solely with the hearing aids. The Appellant is currently supplying the parts and accessories of hearing aids by classifying them under HSN 90219010 and charging GST at 18% under Sl.No 453 to Schedule III to Notf No 01/2017 CT (Rate) dated 28-06-2017. In order to understand the correct classification and rate of tax on the supply of parts and accessories which are suitable for use solely with hearing aids, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat number; (c) tariff item means a description of goods in the list of tariff provisions accompanying eight-digit number and the rate of customs duty. 5.2. The Appellant submitted that in view of the above, it is clear that Tariff item is at 8 digit level; Sub-heading is at 6-digit level and includes 'tariff item'; Heading is at 4-digit level and includes 'sub-heading'. Thereby, 'heading' includes 'tariff item' at 8-digit level. They submitted that the entry No 221 (Schedule II) of Rate Notification which excludes hearing aids and entry No 142 of exemption Notification which includes hearing aids are both defined at 4-digit level i.e only 'heading' 9021 is mentioned while covering the goods. Since 'heading' includes 'tariff item' at 8-digit level within its ambit, the HSN 9021 includes both HSN 902140 (dealing with hearing aids) at 6-digit level and HSN 902190 (dealing with parts and accessories of hearing aids) at 6-digit level within its ambit. Thereby, any reference of HSN 9021 will naturally and automatically mean and include both HSN 902140 and HSN 902190. They also submitted that the description of HSN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng hearing aids would be lost if the parts and accessories are made taxable; that various entries in the rate notf and exemption notification have references to goods at 6-digit level and 8-digit level. Therefore, reference to 4-digit level in entry 221 (Schedule II) of Rate Notf and entry 142 of exemption notf has been consciously made. Stating that parts and accessories are not exempted, clearly when Entry No 142 of exemption Notf is not at 6/8-digit level, is against the intentions of the law makers. 5.6. Notwithstanding the above, the Appellant also submitted that even if it is held that parts and accessories of hearing aids are taxable, even then they would be taxable at the rate of 12% in terms of SL.No 221 (Schedule II) of Rate Notification; that if exclusion of hearing aids from Sl.No 221 (Schedule II) and exempting the same in SL.No 142 of exemption Notf does not cover parts and accessories of hearing aids, then SL.No 221 (Schedule II) of Rate Notf (at 4-digit level) does not remove parts and accessories of hearing aids from its ambit. As noted above, Sl.No 221 (Schedule II) of Rate Notf is replaced by SL.No 255A (Schedule I) of Rate Notf. Therefore, even if the parts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument for exemption is not accepted, the correct rate of tax for parts and accessories of hearing aids will be 12% and not 18%; he contended that if hearing aids are excluded from the entry Sl.No 221 of Schedule II, then this exclusion does not cover parts and accessories which continue to remain in entry Sl.No 221 of Schedule II. Therefore, even if it is held that the parts and accessories are taxable, the rate of tax will be 12% under entry Sl.No 221 of Schedule II and not the residual entry Sl.No 453 of Schedule III. He submitted that with effect from 18th July 2022, this rate will change to 5% by entry Sl.No 255A of Schedule I. 6.4. To further buttress his argument that heading 9021 mentioned at entry Sl.No 142 of exemption Notification covers both hearing aids as well as parts and accessories of hearing aids, he brought forth a fresh argument by drawing attention to entry Sl.No 151 of exemption notification. He submitted that entry Sl.No 151 of the exemption notification specifically exempts 'parts used for the manufacture of hearing aid' falling under any Chapter. He argued that if parts and accessories of hearing aids are already exempted under entry Sl.No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No 02/2017 CT (Rate) dated 28-06-2017. The crux of the matter under appeal before us is regarding the rate of tax applicable to the parts and accessories of hearing aids which are used solely and principally with the hearing aids. Although the Appellant had sought for a ruling on the classification of parts and accessories of hearing aids, we find that they have not disputed the ruling given by the lower Authority that the parts and accessories of hearing aids are classifiable under HSN 9021 90 10. They are particularly aggrieved with the ruling that the parts and accessories of hearing aids are not exempted under Sl.No 142 of the exemption notification but are chargeable to tax at 18% under residual entry Sl.No 453 of Schedule III of Rate Notification No 1/2017 CT (Rate) dated 28-6-2017. 8. We will limit our discussion to the applicable rate of tax for the parts and accessories of hearing aids falling under tariff item 9021 90 10. The classification of goods under GST regime has to be done in accordance with Customs Tariff Act 1975, which is in turn based on Harmonised System of Nomenclature (HSN). Under the harmonised system, there is an eightdigit code assigned to each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of notifications issued under GST law. In the GST Acts, Section 9 (1) of the CGST/KGST Act and Section 5(1) of the IGST Act, creates a charge for the levy of GST on intra-state and inter-state supplies respectively, at the rates which are notified by the Government on the recommendations of the GST Council. Accordingly, the rate of GST applicable to the goods classified under the Customs Tariff Act has been notified vide Notification No 01/2017 Central Tax (Rate) dated 28-06-2017 (for intra-state supplies) and Notification No 01/2017 Integrated Tax (Rate) dated 28-06-2017 (for inter-state supplies). The State Legislature has also enacted similar rate notifications under the State GST law which mirror the above notifications. The scheme of each of the above notifications is such that they set out different rate schedules as follows:- a) Schedule I - specifies goods which carry a rate of 2.5% 15% b) Schedule II - specifies goods which carry a rate of 6% / 12% c) Schedule III - specifies goods which carry a rate of 9% / 18% d) Schedule IV - specifies goods which carry a rate of 14% 128% e) Schedule V - specifies goods which carry a rate of 1.5% / 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description of goods Remarks 01/2017 CT (Rate) dt 28-06-2017 SI.No 221 Schedule II 9021 Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability; intraocular lens [other than orthopaedic appliances, such as crutches, surgical belts, and trusses, hearing aids] GST rate 12% upto 17 th July 2022 01/2017 CT (Rate) dt 28-06-2017 Sl.No 255A - Schedule I 9021 Orthopaedic appliances such as crutches, surgical belts trusses, Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability; intraocular lens [other than hearing aids] GST rate 5% w.e.f 18th July 2022 01/2017 CT (Rate) dt 28-06-2017 Sl.No 453 Schedule III Any Chapter Goods which are not specified in Schedule 1, II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods viz. (i) Splints and other fracture appliances; (ii) artificial parts of the body, (iii) other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability and (iv) intraocular lens. Parts and accessories of hearing aids are not covered within the scope of this entry. 14. The entry Sl.No 221 of Schedule II specifically excludes (i) orthopaedic appliances such as crutches, surgical belts and trusses; and (ii) hearing aids. The exclusion of hearing aids from this entry does not mean that parts and accessories of hearing aids are also excluded from the entry. To conclude thus, it would mean that the 2 items i.e 'hearing aids' and 'parts and accessories of hearing aids' go hand in hand. On the contrary, the Customs Tariff, chapter sub-heading 9021 40 which clearly says 'hearing aids, excluding parts and accessories' implies that any reference to hearing aids always means that it excludes parts and accessories. Accordingly, the exclusion of hearing aids in entry Sl.No 221 of Schedule II is restricted only to hearing aids and does not imply that parts and accessories are also excluded. Parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Schedule II does not cover parts and accessories of hearing aids. For this reason we reject the alternative argument put forth by the Appellant that even if the parts and accessories of hearing aids are held to be taxable, the rate of tax will be 12% under entry Sl.No 221 of Schedule II (upto 17th July 2022) and 5% under entry Sl.No 255A of Schedule I (from 18th July 2022). We also hold that the scope of the entry Sl.No 142 of exemption notification is confined only to hearing aids under heading 9021 and does not include parts and accessories of hearing aids falling under tariff item 9021 90 10. We therefore, dismiss the argument of the Appellant that entry Sl.No 142 of exemption notification which specifies the goods at four-digit heading level should be read to include all sub-heading and tariff item level goods i.e parts and accessories of hearing aids. Parts and accessories of hearing aids are neither covered in the scope of entry Sl.No 221 of Schedule II at 12% tax nor are they covered under the exemption entry Sl.No 142 of Notification No 02/2017 Central-Tax (Rate). 16. The Appellant raised a new ground during the personal hearing wherein they drew attention to entry Sl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of the residuary entry Sl.No 453 in Schedule III. As already explained earlier, the manner of reading the GST rate notification is based on the chapter/heading/sub-heading/tariff item mentioned in the entry together with the description of goods specified in the said entry. One cannot assume that the indication of a chapter or heading in an entry will automatically cover all goods under a sub-heading and tariff items under that chapter or heading and ignore the description of goods specified in the said entry. We have already held that the description of goods in entry Sl.No 221 of Schedule II / 255A of Schedule I does not include within its scope parts and accessories of hearing aids. Therefore we uphold the ruling given by the lower Authority that the parts and accessories of hearing aids falling under tariff item 9021 90 10 are not entitled for exemption under entry Sl.No 142 of Notification No 02/2017 Central Tax (Rate) but are chargeable to tax at the rate of 18% in terms of entry Sl.No 453 of Schedule III of Notification No 01/2017 Central Tax (Rate). 18. In view of the above we pass the following order ORDER We uphold the order No. KAR ADRG 27/2022 dated 12/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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