GST liability was 5%
Case Title | G.B.Agro Industries |
Court | Gujarat Bench AAR |
Honorable Judges | Member J.P Gupta & Member Seema Arora |
Citation | 2021 (7) GSTPanacea 44 HC Gujarat GUJ/GAAR/APPEAL/2021/25 |
Judgement Date | 20-July-2021 |
Council for Petitioner | Avinash Poddar |
Council for Respondent | NA |
Section | Section 103 |
In Favour of | In Favour of Revenue |
The Gujarat Bench of Member J.P Gupta & Member Seema Arora has held that in respect of ‘Bio fertilizers’ held that the two products namely ‘Phosphate Solubilising Bacteria’ and ‘Potassium mobilising Bio-fertilizers’ manufactured and supplied are classifiable under Chapter sub-heading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) and liable to GST at 5%.
GST liability was 5%
FACTS OF THE CASE
The appellant M/s. G.B.Agro Industries is involved in the manufacture of different type of fertilizers such as chemical fertilizers, organic fertilizers and bio-fertilizers.
The appellant has submitted that they distribute their products through the network of Agro dealers and looking at the importance of market needs, they thought it appropriate to enlarge their market base keeping the potential of different areas in mind and have many Agro dealers and distributors in Maharashtra, Gujarat, Madhya Pradesh and Rajasthan.
The appellant had filed an application on 15.08.2020 before the Gujarat Authority of Advance Ruling (hereinafter referred to as GAAR) seeking Advance Ruling on the classification of Organic Fertilizers, Bio-fertilizers, Nitrogeneous mixture fertilizers and Mixture fertilizers. GAAR vide order No. GUJ/GAAR/R/71/2020 dated 17.09.2020 classified the aforementioned products as under:
‘Organic manure’ was classified under Chapter sub-heading No.31059090 on which GST liability was 5% (2.5%SGST + 2.5%CGST).
‘Bio-fertilizers’ were classified under Chapter sub-heading No.30029030 on which GST liability was 12% (6%SGST + 6%CGST).
‘Nitrogeneous mixture fertilizers’ were classified under Chapter subheading No.31029090 on which GST liability was 5% (2.5%SGST + 2.5%CGST).
‘Mixture of fertilizers’ was classified under Chapter sub-heading No.31059090 on which GST liability was 5% (2.5%SGST + 2.5%CGST).
Aggrieved with the aforesaid ruling, the appellant has filed the present appeal on 28.10.2020 challenging the classification of Bio-fertilizers given as per the Advance Ruling of GAAR.
However, the appellant has not challenged the Advance Ruling given in respect of the products Organic manure, Nitrogeneous mixture fertilizers and Mixture of fertilizers.
The appellant has submitted that as per the Fertilizer Control Order 1985, Biofertilizer means the product containing carrier based (solid or liquid) living microorganisms which are agriculturally useful in terms of nitrogen fixation, phosphorus solubilisation or nutrient mobilization, to increase the productivity of soil or crop
The appellant has submitted that their product ‘Bio-fertilizers are classifiable under Chapter Heading 3101 and stated that it is used for agriculture purpose and helps in increasing the productivity of the soil or crop. The appellant has also contended that the Advance Ruling Authority has relied on the definition of ‘Bio-fertilizer’ as given in Vikaspedia and based on this definition, had classified their aforementioned product under Chapter Heading 30029030. So the main issue to be decided is whether the product ‘Bio-fertilizer’, manufactured and supplied by the appellant falls under Chapter Heading 3101 or 3002 or some other Chapter heading under the Customs Tariff Act, 1975(51 of 1975).
GST liability was 5%
COURT HELD
Considering the facts as recorded, held that bench modify the Advance Ruling No. GUJ/GAAR/R /71/2020 dated 17.09.2020 issued by the GAAR in respect of ‘Bio fertilizers’,
By holding that the two products namely ‘Phosphate Solubilising Bacteria’ and ‘Potassium mobilising Bio-fertilizers’ manufactured and supplied by the appellant M/s. G.B. Agro Industries, Bharuch are classifiable under Chapter sub-heading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) and liable to GST at 5% in terms of Sl.No.182D of Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) for the reasons discussed hereinabove.
Also, the classification of the aforementioned products is entirely based on the composition of inputs as given by the appellant and any alteration/change in the composition of the inputs would also result in alteration of the classification of the aforementioned products
GST liability was 5%
ANALYSIS OF THE JUDGEMENT
From the above submission of the appellant, especially the composition of the inputs contained in their products i.e. ‘Bio-fertilizers’ and comparing the same to the definitions of ‘Bio-fertilizers’ mentioned in paras-11 to 13 above, it does not appear to meet the criteria of ‘bio-fertilizer’ particularly because ‘Organic manure’ (main source of which is animal waste) is a major input constituting 50% of the mixture whereas Bio culture contained therein is only 2%. Further, the appellant themselves have submitted that they are presently manufacturing only two types of ‘Bio fertilizers’ namely Phosphate Solubilising Bacteria and Potassium mobilising Bio-fertilizers. Hence, it can be presumed that the composition of inputs submitted by them pertains to these two products only and therefore the classification to be decided is in respect of these two products only.
Bench decide and conclude that the aforementioned two products namely Phosphate Solubilising Bacteria and Potassium mobilising Bio-fertilizers manufactured and supplied by the appellant are classifiable under Chapter subheading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) and liable to GST at 5% in terms of Sl.No.182D of Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time). Bench would also like to emphasize here that the classification of the aforementioned products is entirely based on the composition of inputs as given by the appellant and any alteration/change in the composition of the inputs would also result in alteration of the classification of the aforementioned products.
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G.B.Agro Industries
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