2018 (10) TMI 299 - AAR - GST

AAR rules 'Slate for Teacher' & 'Slate for Student' under Tariff Heading 96.10 for GST exemption.

In Re: M/s. Raja Slates Pvt. Ltd.

The Authority for Advance Ruling (AAR) classified 'Slate for Teacher' and 'Slate for Student' under Tariff Heading 96.10, making them eligible for GST ... Classification of goods - Rate of tax - Slate for Teacher’ - ‘Slate for Student’ - job-work - receipt of ‘manufacturing services on physical inputs (goods) owned by others’ by M/s. Raja Slates Pvt. Ltd. Held that:- From the technical specification of ‘Teachers’ Slate’ and ‘Students’ Slate’, we find that the same are clearly designed to be used for writing or drawing with slate pen and chalk. The material specified to be used in ‘Teachers’ Slate’ is Pine wood base MDF (Medium Density Fibre) and it should be without frame. The material specified to be used in ‘Students’ Slate’ is Pine wood base MDF (Medium Density Fibre) and it should be with Tinpatti Frame in four sides and both sides. Taking the technical specification of ‘Teachers’ Slate’ and ‘Students’ Slate’, as submitted by the applicant, and Explanatory Notes for Heading 96.10 of Harmonised System of Nomenclature, into consideration, we hold that the product ‘Teachers’ Slate’ and ‘Students’ Slate’ is appropriately classifiable under Tariff Heading 96.10. Rate of tax - Held that:- The product ‘Slates’ falling under Tariff Item 9610 00 00 is exempted from Goods and Services Tax vide Sl. No. 146 of Notification No. 2/2017Central Tax (Rate) dated 28.06.2017 issued under the Central Goods and Services Tax Act, 2017 and corresponding Notification issued under the Gujarat Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017 (herein after referred to as the ‘IGST Act, 2017’), whereas the product ‘Boards, with writing or drawing surface, whether or not framed’ falling under Tariff Item 9610 00 00 is leviable to Goods and Services Tax @ 18% (CGST 9% + SGST 9% or IGST 18%) vide Sl. No. 448 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 issued under the CGST Act, 2017 and corresponding Notification issued under the GGST Act, 2017 or the IGST Act, 2017. It is now well settled principle of interpretation of statue that the word not defined in the statute must be construed in its popular sense, meaning ‘that sense which people conversant with the subject matter with which the statue is dealing would attribute to it’. It is to be construed as understood in common language. Whether the products manufactured and supplied by the applicant can be termed as ‘Slates’ as understood in common parlance, or otherwise? - Held that:- It is observed that in the document issued by the Gujarat Council of Elementary Education, the products have been referred to as ‘Slate for Student’ and ‘Slate for Teacher’. Thus, the products ‘Slate for Student’ and ‘Slate for Teacher’ are known as ‘Slates’ in common parlance and therefore are eligible for exemption from payment of Goods and Services Tax vide Sl. No. 146 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 issued under the CGST Act, 2017 and corresponding Notifications issued under the GGST Act, 2017 and the IGST Act, 2017. Levy of tax on job-work - appellant are getting some job work done on slates and when the main manufactured item is tax free - reverse charge mechanism - Held that:- As per clause 3 of Schedule II of the CGST Act 2017 and the GGST Act, 2017, ‘any treatment or process which is applied to another person’s goods is a supply of services’. Accordingly, applicable Goods and Service Tax on ‘manufacturing services on physical inputs (goods) owned by others’ is required to be paid - Further, as per clause (4) of Section 9 of the CGST Act, 2017 and the GGST Act, 2017 the Goods and Services Tax (Central Goods & Services Tax and State Goods and Services Tax) in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of the Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. In a case where registered person is recipient of taxable service of ‘manufacturing services on physical inputs (goods) owned by others’ from the supplier of such service who is not registered, the Goods and Services Tax is required to be paid under Section 9(4) of the CGST Act, 2017 and the GGST Act, 2017, subject to exemption, if any, available. Ruling:- The products ‘Slate for Student’ and ‘Slate for Teacher’ supplied by M/s. Raja Slates Pvt. Ltd. are appropriately classifiable under Tariff Heading 96.10. The products ‘Slate for Student’ and ‘Slate for Teacher’ supplied by M/s. Raja Slates Pvt. Ltd. are eligible for exemption from payment of Goods and Services Tax vide Sl. No. 146 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 issued under the CGST Act, 2017 and Sl. No. 146 of Notifications No. 2/2017-State Tax (Rate) dated 30.06.2017 issued under the GGST Act, 2017. In case of receipt of ‘manufacturing services on physical inputs (goods) owned by others’ by M/s. Raja Slates Pvt. Ltd. from the unregistered supplier of such service, the Goods and Services Tax is required to be paid by M/s. Raja Slates Pvt. Ltd. under Section 9(4) of the CGST Act, 2017 and the GGST Act, 2017, subject to exemption, if any, available. Issues Involved1. Classification of goods: 'Slate for Teacher' and 'Slate for Student'.2. Rate of Goods and Services Tax (GST) on 'Slate for Teacher' and 'Slate for Student'.3. Applicability of Reverse Charge Mechanism (RCM) for job work on slates.Detailed Analysis1. Classification of Goods: 'Slate for Teacher' and 'Slate for Student'The main issue presented was the classification of 'Slate for Teacher' and 'Slate for Student'. The applicant argued that both slates should be treated as tax-free under GST, similar to their status under the Gujarat Value Added Tax Act. The Authority for Advance Ruling (AAR) considered the technical specifications and the Harmonised System of Nomenclature (HSN) Explanatory Notes for Heading 96.10, which includes 'slates and boards with writing or drawing surfaces, whether or not framed.' The technical specifications provided by the applicant showed that both types of slates are designed for writing or drawing with slate pens and chalks. Thus, the AAR concluded that both 'Slate for Teacher' and 'Slate for Student' are appropriately classifiable under Tariff Heading 96.10.2. Rate of Goods and Services Tax on 'Slate for Teacher' and 'Slate for Student'The next issue was determining the applicable GST rate for 'Slate for Teacher' and 'Slate for Student'. The AAR noted that products falling under Tariff Item 9610 00 00 are exempt from GST as per Sl. No. 146 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017. The term 'Slates' was not defined under the CGST Act, GGST Act, or IGST Act. The AAR applied the principle of common parlance, citing the Supreme Court's rulings that terms not defined in the statute should be understood in their popular sense. The products were referred to as 'Slate for Student' and 'Slate for Teacher' in the document issued by the Gujarat Council of Elementary Education, indicating that they are known as 'Slates' in common parlance. Therefore, both products are eligible for exemption from GST.3. Applicability of Reverse Charge Mechanism for Job Work on SlatesThe applicant also raised the issue of whether GST needs to be paid under the Reverse Charge Mechanism (RCM) for job work done on slates when the main manufactured item is tax-free. The AAR referred to clause 3 of Schedule II of the CGST Act and GGST Act, which considers any treatment or process applied to another person's goods as a supply of services. Therefore, applicable GST on 'manufacturing services on physical inputs (goods) owned by others' must be paid. As per Section 9(4) of the CGST Act and GGST Act, if the supplier of such service is unregistered, the recipient (in this case, the applicant) must pay GST on a reverse charge basis, subject to any available exemptions.Ruling(A) The products 'Slate for Student' and 'Slate for Teacher' supplied by the applicant are classifiable under Tariff Heading 96.10.(B) These products are eligible for exemption from GST as per Sl. No. 146 of Notification No. 2/2017-Central Tax (Rate) and corresponding notifications under the GGST Act and IGST Act.(C) If the applicant receives 'manufacturing services on physical inputs (goods) owned by others' from an unregistered supplier, GST must be paid under Section 9(4) of the CGST Act and GGST Act, subject to any available exemptions.