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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether khadi readymade garments are covered by the exemption entry for khadi fabric under Notification No. 02/2017-Central Tax (Rate) as amended by Notification No. 28/2017-Central Tax (Rate). (ii) If not exempt, what is the proper classification and GST rate applicable to khadi readymade garments.
Issue (i): Whether khadi readymade garments are covered by the exemption entry for khadi fabric under Notification No. 02/2017-Central Tax (Rate) as amended by Notification No. 28/2017-Central Tax (Rate).
Analysis: The exemption entry inserted at Serial No. 130A applies only to khadi fabric sold through KVIC and KVIC-certified institutions or outlets. Readymade garments made from khadi fabric are distinct goods and do not fall within that entry.
Conclusion: Khadi readymade garments are not exempt under the khadi fabric entry and the issue is decided against the applicant.
Issue (ii): If not exempt, what is the proper classification and GST rate applicable to khadi readymade garments.
Analysis: Readymade garments are classifiable under Chapter heading 62 of Notification No. 01/2017-Central Tax (Rate). The applicable rate depends on sale value: garments not exceeding Rs. 1000 per piece fall under the 12% schedule entry, while those exceeding Rs. 1000 per piece fall under the 5% schedule entry as stated in the ruling.
Conclusion: Khadi readymade garments are classifiable under Chapter heading 62 and attract GST at 5% or 12% depending on the sale value as ruled.
Final Conclusion: The ruling denies exemption for khadi readymade garments under the khadi fabric entry and determines their classification and tax rate under the garment entries of the rate notification.
Ratio Decidendi: An exemption entry for khadi fabric cannot be extended to readymade garments made from khadi fabric unless the notification expressly includes such garments; in the absence of such inclusion, classification must be determined under the specific garment entry.
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