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April 27, 2022

18% GST levied on PSA Medical Oxygen Generation Plant

by CA Shivam Jaiswal in GST

18% GST levied on PSA Medical Oxygen Generation Plant

Facts and Issue of the case

M/s. Freeze Tech Innovations 3 E A, Rarnakrishna Puram, Coimbatore, 641 001. (hereinafter called the Applicant) is registered. They have sought Advance Ruling on the following question:

  • Applicant need to know the Tax percentage of PSA Medical Oxygen generation plant.
  • Applicant need to know the HSN Code of PSA Medical Oxygen plant to generate the invoice accordingly.
  • Applicant need to know the tax benefit for the hospital for installing PSA Medical Oxygen plant.

The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/-

           The applicant has stated that they are manufacturing PSA Medical Oxygen generation plant. They are going to deal this product to their customers and they need to know the tax percentage with 1-1SN code for this particular product. They have stated that they need the confirmation for GST percentage for their Medical Oxygen PSA Plant. They are having some confusions of GST percentage for the same. Because, as per the GST notification they came to know the GST portion for PSA Medical Oxygen is 5% & 6% & 18% respectively. But still they are not able to find the finalized percentage which will be applicable for this product.

          Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the willingness of the applicant to participate in a virtual Personal Hearing in Digital media was confirmed and hearing was held on 19.01.2022. The Authorised representative, Shri. R.Ramachandran, Managing Partner appeared for the hearing virtually and stated that they have been selling oxygen Generation Plant at 12% GST. The State Member requested the applicant to provide details mentioned at SI. No. 15 of their Advance Ruling Application regarding statement of facts.

The State Jurisdictional Authority, Assistant Commissioner (ST), Perur Assessment Circle, who has the administrative Jurisdiction over the applicant vide letter has stated that there are no proceedings pending with respect to Perur circle.

The State Jurisdiction Officer, Perur Assessment Circle was required by this authority vide this office letter to verify and report whether all the components are assembled in house and installed in their premises.

The Center Jurisdiction Authority has reported that there are no proceedings/investigation initiated against the said applicant as per their records.

Court have gone through the contents in the application, additional submissions made in pursuance of the virtual personal hearing and the remarks and verification report of the Jurisdiction Officers. Court find that the applicant have stated that they are manufacturing PSA Medical Oxygen generation plant. They have sought ruling on the following questions:

  • Court need to know the Tax percentage of PSA Medical Oxygen generation plant.
  • Court need to know the HSN Code of PSA Medical Oxygen plant to generate the invoice accordingly.
  • Court need to know the tax benefit for the hospital for installing PSA Medical Oxygen plant.

Observation of the case

The issue before us for determination is the classification of the PSA Plant and the applicable rate of Tax. From the copy of invoice furnished by the applicant it is seen that they are classifying under HSN 90192090. It is pertinent to mention that for the purposes of GST,the Customs Tariff which is based on HSN is made applicable.

From the above it is noticed that the CTH 901920 relates to “ozone therapy, oxygen therapy, aerosol therapy, artificial respiration or other therapeutic respiration apparatus” and as per the Explanatory notes above, the appliances used for artificial respiration, Oxygen therapy appliances proper, etc are covered under this CM. In the case at hand, the applicant supplies PSA 02 Manufacturing Plant which is not in the genre of the appliances said to include in the CTH 901920 Therefore, the entry relied on by the applicant is not correct.

The product PSA Medical Oxygen Generator’ is supplied by the Applicant to their customer. The function of the product is Generation of Oxygen Gas. PSA Oxygen Generator works on the principle of Pressure Swing Adsorption, which is being used to separate Oxygen from the Compressed air. The major components of Medical Oxygen Generator are a pair of Adsorbent vessels, Surge tank, Switching valves, Intelligent PLC, Oxygen analyzer, and instruments. The adsorbent vessels of Medical Oxygen Generator are filled with Zeolite which preferentially adsorbs Nitrogen and CO2 whereas Oxygen is not adsorbed by zeolite due to its larger molecular size and passes through the Adsorber to the surge tank. Based on the pre-set time interval of medical Oxygen generator the online Adsorber switches to generation mode and adsorbed gas from Zeolite are purged out to the atmosphere. During this operation Oxygen analyzer which is a standard scope of medical oxygen generator monitors the oxygen concentration and if the oxygen concentration is lower than the pre-set value, the PLC switches on the vent valve and purges out the gas till it reaches the required purity level. At the same time the hospital Oxygen demand will be automatically met through the standby valves and secondary source of Oxygen. The PSA Medical Oxygen Generator supplied by the Applicant, is an Air Separator and not a therapeutic device.

From the above, it is evident that the air Separators are classifiable under CTH 8421. In the case at hand, the product, PSA Oxygen Generation Plant manufactured and supplied by the applicant is an Air Separator as has been brought out in para 8.1 above, therefore, the Product is classifiable under CTH 8421. In view of the above, we hold that the product “PSA Medical Oxygen Generation Plant” is classifiable under CTH 8421 39 and more specifically under CTH 8421 39 90.

Conclusion

Court ruled that the PSA Oxygen generator is liable to CGST @ 9% under and SGST at 9%.

In-re-Freeze-Tech-Innovations-GST-AAR-Tamil-Nadu

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