Agricultural products classified under different GST rates based on organic certification and growth regulator content

AAR Maharashtra classified various agricultural products for GST purposes. Seven products (AUTUS, SJ-NINJA, SJ-ERASER, OPRAX, TELNAR, VK's NEMO, and STRESSOUT) were classified under HSN 3808 as plant growth regulators, insecticides, fungicides, bactericides, or nematicides, attracting 18% GST. Only SHYAM SAMRUDDHI qualified as organic fertilizer under HSN 3105, liable to 5% GST, being certified organic with nutrients from organic sources and lacking growth regulators. The Authority relied on product literature, mode of action, and essential character for classification, citing precedent that pamphlet contents are relevant circumstances for determining proper classification.

---

---

1. ISSUES PRESENTED and CONSIDERED

The core legal question considered by the Authority for Advance Ruling (AAR) was the classification of various agricultural products manufactured by the applicant under the Harmonized System of Nomenclature (HSN) and the applicable Goods and Services Tax (GST) rate for these products. Specifically, the issue was whether these products should be classified as organic fertilizers under HSN 3101 or 3105, or as plant growth regulators or pesticides under HSN 3808.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The classification of goods under the GST regime is guided by the Customs Tariff Act, 1975, which aligns with the Harmonized System of Nomenclature (HSN). The relevant chapters considered were:

• HSN 3101: Animal or vegetable fertilizers, whether or not mixed together or chemically treated.
• HSN 3105: Mineral or chemical fertilizers containing two or three of the fertilizing elements nitrogen, phosphorus, and potassium.
• HSN 3808: Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products, and plant growth regulators.

Court's interpretation and reasoning:

The AAR analyzed each product based on its composition, intended use, and the applicant's submissions. The AAR considered the definitions and characteristics of fertilizers, plant growth regulators, and pesticides to determine the appropriate classification.

Key evidence and findings:

The applicant provided certificates from accredited agencies certifying the products as organic. The products were described as containing various organic and micronutrient elements intended to enhance plant growth and immunity. However, the AAR also considered the product literature and marketing materials, which described some products as having pesticidal or plant growth regulatory effects.

Application of law to facts:

The AAR applied the definitions and characteristics of fertilizers and plant growth regulators to the products in question. For products like AUTUS and SJ-NINJA, which showed characteristics of plant growth regulators or insecticides, the AAR classified them under HSN 3808. For SHYAM SAMRUDDHI, which was primarily a nutrient provider without pesticidal claims, the AAR classified it under HSN 3105.

Treatment of competing arguments:

The applicant argued that the products should be classified as organic fertilizers due to their nutrient content and certification. However, the AAR considered the broader characteristics and intended effects of the products, leading to a classification that aligned with their functional use as per the product literature.

Conclusions:

The AAR concluded that products with characteristics of plant growth regulators or pesticidal effects should be classified under HSN 3808, while those serving primarily as fertilizers should be classified under HSN 3105.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"The classification cannot be based only upon what is stated in the pamphlets but the contents of the pamphlets are certainly one of the relevant circumstances which can be taken into consideration while determining classification."

Core principles established:

The AAR established that the classification of products under GST should consider the functional characteristics and intended use of the products, as evidenced by both their composition and marketing materials.

Final determinations on each issue:

• Products AUTUS, SJ-NINJA, SJ-ERASER, OPRAX, TELNAR, VK's NEMO, and STRESSOUT were classified under HSN Code 3808 and subjected to GST at 18%.
• Product SHYAM SAMRUDDHI was classified as an organic fertilizer under HSN 3105 and subjected to GST at 5%.

---