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September 27, 2021

‘Ammonium Sulphate’ shall be classified under HSN 310221

by Mahesh Mara in GST, Legal Court Judgement

‘Ammonium Sulphate’ shall be classified under HSN 310221

Fact and Issue of the case

The applicant, M/s. Willmart Enterprise, supplies Ammonium Sulphate. The applicant submits that the product has agricultural as well as non-agricultural use as follows:

(A) Agriculture use: The product can be used as fertilizers for increasing soil and land fertility. It can be either used as such, by way of fertilizer or in manufacture of other complex fertilizer that are used for agriculture purposes (say crop or soil fertilizer) or even otherwise in any other form of which the most common use of this fertilizer is to fertilize the soil i.e. used to alkine soil for lowering the PH balance of soil and also for contributing essential nitrogen for plant growth, as an agricultural spray adjuvant for water soluble insecticides, herbicides and fungicides.

(B) Non agriculture use: Any other use of the product other than agriculture use as mentioned above are treated as non-agriculture use. It also has food additive and laboratory uses. It can also be used for treatment of drinking water along with chlorine, for preparation of ammonium salt, in textile industry for dyeing purpose etc.

The applicant submits that they supply fertilizers to different types of customers having both the purposes i.e. agriculture purpose and/or nonagriculture; that the proprietor has set an unwritten business policy to demand from their prospective customers the NOC as issued to them by Directorate of Agriculture to determine whether the product has agriculture use or nonagriculture use and upon receipt of the NOC, the applicant goes through the same to confirm whether the NOC is specifically issued for the product and validity of the same; that the applicant also obtains the declaration from the prospective customers declaring the use of the product as ‘agriculture’ and once both i.e. NOC and declaration are received, this sales transaction is treated by the applicant as sale of product for the agriculture purpose. The NOC from the Directorate of Agriculture as referred herein above is required to be obtained by those enterprise/units who are intending to sell or offer for sales or carrying on the business of selling of agricultural fertilizer.

The applicant has sought Advance Ruling on the following questions:-

1. Whether the classification of product under HSN 3102 is correct?

2. Whether the applicant is eligible to avail the benefit of charging concessional rate of GST of 5% on outward supply of its product for the purpose of agriculture?

3. Rate of GST on outward supply of product for the purpose of nonagriculture should be charged @ 18%?

Observation of the Authority

At the outset authority would like to make it clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act.

it is been noted that the Revenue maintains that subject application cannot be admitted. However, we find no deficiency in the said application and find it fit to be admitted. We proceed with our findings.

Authority has carefully considered all the submissions made by the applicant. We find that there is specific entry for ‘Ammonium sulphate’ at CTH 310221. As per HSN Explanatory Notes, Ammonium Sulphate, whether used as fertiliser or not, is to be classified at CTH 310221. We note that applicant is a wholesale supplier, as per its submission. Further, we have perused the Notification 1/2017- CT(R) and the CBIC Circular dated 9-8-18 as cited by the applicant.

Ruling of the Authority

1. ‘Ammonium Sulphate’ is classifiable at HSN 310221.

2. GST of 5% is leviable on Ammonium Sulphate supplied for direct use as fertilizers or used in the manufacturing of complex fertilizers for agricultural use (soil or crop fertilizers).

3. GST of 18% is leviable on Ammonium Sulphate supply for other than fertilizer use.

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