9911796707
TMI Blog2025 (2) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... hen which would arise is whether Rule 3(c) of the GRI or Section 8(b), of the CGST Act, 2017, would prevail. It is a trite law that when the section is unambiguous, the averment of the appellant to take the assistance GRI for deciding the nature of supply, classification and rate of tax, is not legally tenable. This submission of the appellant is rejected.
Conclusion - i) The supply of pencils sharpener along with pencils under product DOMS A1 is covered under the category of 'mixed supply'. ii) Since it is a mixed supply, the HSN code of the supply which attracts the higher rate of tax among all the taxable supplies contained in product DOMS A1, is required to be used. iii) The supply of the sharpener along with the kit having a nominal value will have an impact on rate of tax. The rate of tax will be 12% and the HSN code, in respect of mixed supply fie product DOMS A1] will be the supply which attracts the higher rate of tax among all the three supplies ie 8214 or 9608 or 9609.
Appeal rejected. X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that sharpener & eraser are included as accessories; that an accessory is not essential to the product; * the dictionary meaning of accessory suggest that the pencil sharpener & eraser supplied with the pack is not an integral part of the pencil but it is useful for the pencil; * pencil sharpener & eraser are not naturally bundled & all these products cannot be considered as made in conjunction with each other in ordinary course of business; * the argument that in the industry all the goods are sold together is not tenable; * that few in the industry adopt such marketing of supplying he goods together; * that the products are supplied independently also; * that the goods are not naturally bundled; * that it is very difficult to determine the principal supply; * that it fulfils all the conditions of a mixed supply; * that recourse to GRI is not proper since what is being decided is nature of supply and not classification of the product. 7. The GAAR, thereafter, vide the impugned ruling dated 18.10.2021, held as follows: (i) the supply of pencils sharpener along with pencils is covered under the category of 'mixed supply'; (ii) as discussed in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 'ancillary in the law lexicon as been accepted: * that the concept of principal supply is similar to Rule 3(b) of GIR, which provides for essential character; that the principles laid down for determining goods providing essential character to a set can also be extended determine the principal supply. 8. Personal hearing in the matter was held on 8.11.2024 wherein Shri Rahul Shah, authorized signatory, Shri Santosh Sonar and Shri Keshar Soni, appeared and reiterated the submissions made in the appeal. During the course of personal hearing a compilation containing copy of the appeal papers already filed, along with copies of the following was submitted [a] Copy of the ruling passed under US Customs Cross ruling N245467 dated 10.9.2013]; [b] photocopy of images of similar product sold by major industry player; [c] GST rate changes of pencil sharpener [d] photocopy of the answer of the Hon'ble the Minister of State for Finance in the Rajya Sabha to unstarred question No. 1043 dated 12.12.2023, along with annexure; [e] ruling of GAAR in the case of Baroda Medicare P Ltd 2021 (55) GSTL 495 (AAR-GST-Guj), Sameera Trading Company 2019 (31) GSTL 375 (AAR-GST-Guj), So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Guide issued by CBIC 9.2.4 Manner of determining if the services are bundled in the ordinary course of business Whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which services relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below- * The perception of the consumer or the service receiver. If large number of service receivers of such bundle of services reasonably expect such services to be provided as a package then such a package could be treated as naturally bundled in the ordinary course of business. * Majority of service providers in a particular area of business provide similar bundle of services For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines * The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification needs to be undertaken based on Rule 3 of GIR; that in case of sale of composite goods consisting of different materials/components and goods put up in sets for retail sale, Rule 3(b) of GIR is to be applied; that the explanatory notes define the term 'goods put up in sets for retail sale'. 16. The relevant extracts of General Rules for Interpretation [GRI] of the HSN, is as under: 3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such case wherein a supply falls within the ambit of either a composite/mixed supply. We have already held that the product 'DOMS A1 pencil', is a mixed supply, the product not being naturally bundled, not having a principal supply and not supplied in conjunction with each other in the ordinary course of business. Now, for the sake of argument, even if we were to examine the claim of the appellant, we find that the product of the applicant, in question, would not fall either within Rule 3(a) or 3(b) of the GIR, leaving us with the only alternative of resorting to Rule 3(c). The question then which would arise is whether Rule 3(c) of the GRI or Section 8(b), of the CGST Act, 2017, would prevail. It is a trite law that when the section is unambiguous, the averment of the appellant to take the assistance GRI for deciding the nature of supply, classification and rate of tax, is not legally tenable. We therefore, reject this submission of the appellant. 18. Lastly, the applicant has relied upon various rulings, foreign and others. [a] US Customs ruling [Cross ruling N245467 dated 10.9.2013]. Having gone through the tariff classification ruling, we find that it is for a samp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opelling or sliding pencils), crayons, pastels, drawing charcoals & tailors chalk
9608/9609
12%
Sr. No. 233 of Schedule II of notification No. 1/2017-CT (Rate), as amended.
3.
Erasers
4016
5%
Sr. No. 191 of Schedule I of notification No. 1/2017-CT (Rate), as amended.
# changes in the rate of GST in respect of pencil sharpener
HSN code
Product
GST rate
Upto 17.7.2022
From 17.7.2022 to 28.2.2023
From 1.3.2023
8214
Pencil sharpener
12%
18%
12%
Question 3: Whether supply of sharpener along with the kit having a nominal value will have an impact on rate of tax. If yes, what will be the rate of tax & HSN code to be used by use.
Ruling: Yes, the supply of the sharpener along with the kit having a nominal value will have an impact on rate of tax. The rate of tax will be 12% and the HSN code, in respect of mixed supply fie product DOMS A1] will be the supply which attracts the higher rate of tax among all the three supplies ie 8214 or 9608 or 9609.
20. In view of the above findings, we reject the appeal filed by appellant M/s DOMS Industries P Ltd., against Advance Ruling No. GUJ/GAAR/R/2022/52 dated 30.12.2022 of the Gujarat Authority for Advance Ruling. X X X X Extracts X X X X X X X X Extracts X X X X
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