GST on an agricultural hand-operated
Case Title | Shree Swaminarayan foods Pvt Ltd. |
Court | Authority for Advance Ruling, Gujarat |
Honorable Judges | Member J.P Gupta and Member Seema Arora |
Citation | 2021 (11) GSTPanacea 51 HC Gujarat GUJ/GAAAR/APPEAL/2021/31 |
Judgement Date | 02-November-2021 |
Council for Petitioner | Mr. Aparva N Mehta |
Council for Respondent | Not applicable |
In favour of | Revenue |
Section | Levy of GST and Section 100 of CGST Act,2017 |
FACTS OF THE CASE
GST on an agricultural hand-operated
The issue, in this case, was the classification of the product, namely, “Agricultural manual hand operated Seed dressing, Coating and Treating drum”, and deciding the applicable rate of GST on the same.
The Appellant submitted that only because their product consists of the drum in which seeds are coated with chemicals before sowing, it is not a correct base to classify their product under HSN Code 8436 as under this code, the machinery operates with the use of additional power of mechanical or thermal kind. Whereas their product is not fitted with any mechanical or thermal equipment, it is rotated by hand and opened or closed by hand. Thus, it should either be classified under HSN 8201, which attracts a Nil rate of GST where manually operated agriculture or animal-driven tools are classified or under HSN 8437, which attracts a 5% rate of GST where the machinery for cleaning, sorting or grading of seed or grain is included.
GST on an agricultural hand-operated
COURT HELD
The Authority observed that the classification of goods under the GST regime has to be done in accordance with the Customs Tariff Act, 1975 (CTA) based on a Harmonised System of Nomenclature. However, once an item is classified in accordance with the CTA, the rate of tax applicable would be arrived at based on notifications issued under GST by the respective Governments. Moreover, HSN 8201 includes tools which are used in hand, like shovels, forks, etc., having a working blade, edge, and surface. Thus, the manually operated seed dressing drum of the appellant cannot be classified under this heading. It was further viewed that HSN 8437 includes machines for cleaning, sorting or grading seeds, grains etc., other than farm-type machinery used by farmers during agriculture to cover, coat and treat chemicals on seeds before sowing.
GST on an agricultural hand-operated
The Authority took note of the explanatory notes to HSN 8436, which explains the scope of the entry, and viewed that other agricultural machinery includes seed dusting machines consisting of a revolving drum in which the seeds are coated with insecticidal or fungicidal powders; further, the appellant’s machinery is used to cover and coat chemicals over seeds or grains before sowing to increase their germination and immunity against disease. Moreover, the appellant’s product is agricultural machinery, and the same is farm-type machinery. Thus, it is covered under heading 8436 and is liable to GST at a 12% rate.
GST on an agricultural hand-operated
ANALYSIS OF THE JUDGEMENT
As per the above case, we analyse that the appellant’s product is classified at HSN 8436 tariff item and liable to GST at 12% rate and observed that as the appellant’s product is in its use, as well as its function is described under the said HSN Code, thus it is covered within the description provided under the said code.
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Shree Swaminarayan foods Pvt Ltd.
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