GST on manually operated agricultural seed dressing, coating, and treating drums
Facts and Issue of the Case
The present appeal has been filed under Section 100 of the CGST Act, 2017 and the GGST Act. 2017 by MIs. Adarsh Plant Protect Ltd. The appellant has applied for Advance Ruling for determining the HSN and applicable tax on ‘Agricultural manually hand operated Seed dressing, Coating and Treating drum’. The appellant has submitted that these manually operated machine are used by the farmer in agriculture to cover, coat and treating chemicals on seeds before sowing and falls under HSN 8201 and attract Nil rate of GST. They further submitted that other manufacturers of similar kinds of machines of power operated are charging 5% GST under HS code 84371000.
The Gujarat Authority for Advance Ruling includes tools which are used in hand and these tools almost always have a spring which forces the shafts apart from cutting and a hook or other fastening so that they can be easily opened/closed with one hand. Whereas appellant’s product is not hand tool rather it is machine used for seed dressing. coating and treating the seed with chemicals. That there is no merit to classify the subject goods at HSN 8201. The GAAR also relied upon the Notes of HSN 8436 which states that other agricultural machinery under the said HSN code includes seed dusting machines usually consisting of one or more hoppers feeding a revolving drum in which the seed are coated with insecticidal or fungicidal powders; the chapter makes no difference between manual and power driven machines; after going through HSN 8436 notes, FISN 8437 which covers machines for cleaning, sorting or grading seed, grains or dried leguminous vegetables etc is not required to be examined. Aggrieved by the aforesaid advance ruling, the appellant has filed the present appeal. During the course of personal hearing, the appellant reiterated the submissions made in the appeal. They further submitted that if exemption is not granted then their product will become expensive for the farmers.
Observation by the Court
The court had carefully gone through and considered the appeal and written submissions filed by the appellant, submissions made at the time of personal hearing, Advance Ruling given by the GAAR and other material available on record. The main issue to be decided here is the classification of the product viz. -Agricultural manually hand operated Seed dressing, Coating and Treating drum” and to decide applicable rate of GST on the same.
The court find that the classification of goods under GST regime has to be done in accordance with the Customs Tariff Act, 1975, which in turn is based on I larmonized System of Nomenclature, popularly known as The General Rules of Interpretation, Section notes and Chapter notes as specified under the Customs Tariff Act, 1975 are also applicable for deciding classification of goods under the GST regime. However, once an item is classified in accordance with the Customs Tariff Act, 1975, the rate of tax applicable would be arrived at on the basis of notifications issued under GST by the respective Governments.
The appellant claimed that agricultural manually hand operated seed dressing drum is classifiable under Chapter of Customs Tariff Act, 1975. On perusal of Chapter, it is clear that this heading includes tools which are used in hand like shovels, forks, pruners etc having blade, working edge and working surface and in view of above, appellant products viz. manually operated seed dressing drum, therefore by no stretch of imagination, can be said to be classified under Heading 8201. Further the aforesaid HSN Note reproduced clearly lays down that if a machine by reason of their weight or size or the degree offered required for their use, they are fitted with base plates, stands, supporting frames, etc., for standing on the floor, bench, etc., are to be classified under Chapter 84. Taking aforesaid HSN Notes into account it is obvious that the product will fall under Chapter 84 and not under Chapter 82.
The GAAR in its ruling held that appellant’s product is classifiable under Chapter which appellant has submitted in their appeal before this authority that basic fact and necessity of HSN code 8436 which includes various agriculture machineries fitted with mechanical or thermal equipment and that machinery under HSN code 8436 operates with use of additional power of mechanical or thermal kind whereas their product i.e. manually operated seed dressing drum is not fitted with any mechanical or thermal equipment but it is rotated with hand and opened or closed with hand and therefore, cannot be classified under HSN 8436.
The appeal filed by the appellant is rejected by the court.In-re-Adarsh-Plant-Protect-Ltd-GST-AAAR-Gujarat