2019 (2) TMI 191 - AAR - GST

Dispute over GST rates on electricity receipts & rejected seeds; conflicting views on classification & tax rates

The case involved a dispute over the classification and GST rate on receipts for electricity distribution and the levy of GST on 'Rejected Wheat Seed' and ... Levy of GST - supply of ‘Rejected Wheat Seed’ and ‘Rejected Paddy Seed’ - Difference of opinion - Held that:- As there is difference of opinion, a reference made to the Appellate Authority for hearing and decision on said issue in terms of Section 98(5) of the Act ibid which provide that where the members of the Authority differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question. Matter referred to Appellate Authority. Issues:Classification and rate of GST on receipts for distribution of electricity.Leviability of GST on 'Rejected Wheat Seed' and 'Rejected Paddy Seed'.Classification and Rate of GST on Receipts for Distribution of Electricity:The application under Section 97 of the CGST/SGST Act, 2017 was filed seeking an advance ruling on the classification and rate of GST on various receipts received for the distribution of electricity. The authority admitted the application as per Section 97(2)(a) & (e) of the Act, allowing for a ruling on the matter. The concerned officers submitted a report indicating that the tax would be leviable at 5% on the supply of 'Rejected Seed' based on the absence of a specific entry for 'Rejected Seed' in the Uttarakhand Goods and Service Tax Act, 2017.Leviability of GST on 'Rejected Wheat Seed' and 'Rejected Paddy Seed':Upon a personal hearing, differing views were presented by the members of the authority. One member opined that 'Rejected Wheat Seed' and 'Rejected Paddy Seed' do not remain seeds anymore due to chemical treatment, and thus, attract a 5% tax rate under a specific entry in the GST tariff. However, the other member disagreed, citing the Customs Tariff for classification under HS Code 1001 and 1006, which includes all Wheat and Paddy Seeds, rejected or not. This member concluded that the 'Rejected Wheat Seed' and 'Rejected Paddy Seed' fall under the Nil GST rate based on the relevant chapter notes of the GST tariff.Given the conflicting opinions, a reference was made to the Appellate Authority for a decision on the classification and leviability of GST on the supply of 'Rejected Wheat Seed' and 'Rejected Paddy Seed' as per Section 98(5) of the Act. The Appellate Authority will address the points of contention raised by the members and provide a final ruling on the matter.