Ruling: Pulpwood reclassification for paper mills under GST.

The Authority for Advance Ruling classified the pulpwood supplied to paper mills under Heading 4403 instead of Heading 4401, subjecting it to an 18% GST rate. The applicant was ruled to pay CGST and SGST at 9% each for supplying debarked Eucalyptus, Acacia, Subabul, Casurina, Pine Pulpwood in billets. This decision aligned with Circular No. 80/54/2018-GST, providing clarity on the correct classification and tax rate for wood logs used in pulping activities. The ruling ensured consistency and compliance in tax treatment for the applicant's transactions involving pulpwood supply to paper mills.

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Issues: Classification of Pulpwood supplied to paper mills and the rate of tax (GST) thereon.

Classification of Pulpwood:
The applicant sought an advance ruling regarding the classification of various types of pulpwood supplied to paper mills. The applicant supplied debarked Eucalyptus, Acacia, Subabul, Casurina, Pine Pulpwood in billets to paper mills based on their requirements. The applicant highlighted the confusion in the interpretation of applicable sections for this type of pulpwood by different buyers, leading to varying GST rates being charged by different paper mills. The applicant also mentioned their inability to quote the correct GST rate to customers due to this confusion.

Analysis of Classification:
The Authority for Advance Ruling analyzed the specifications provided by the applicant against the relevant headings under the CGST Act and the KGST Act. They compared Heading 4401, covering fuel wood, with Heading 4403, covering Wood in the rough. After detailed examination, it was concluded that the goods supplied by the applicant did not fall under Heading 4401 but were appropriately classified under Heading 4403 as per the specifications provided. A circular issued by the Government of India further clarified that wood logs used for pulping fall under Heading 4403 and attract an 18% GST rate.

Rate of Tax (GST) Determination:
Based on the classification analysis, the Authority ruled that the applicant is liable to pay CGST and SGST at the rate of 9% each for the supply of debarked Eucalyptus, Acacia, Subabul, Casurina, Pine Pulpwood in billets to paper mills under HSN code 4403. This ruling was made in accordance with Circular No. 80/54/2018-GST dated 31-12-2018, which clarified the GST rate applicability for wood logs used for pulping.

Conclusion:
The judgment provided a detailed analysis of the classification of pulpwood supplied to paper mills and the applicable GST rate. By examining the specifications of the supplied wood against the relevant headings and circulars, the Authority for Advance Ruling determined the correct classification and GST rate for the applicant's transactions, ensuring clarity and compliance in tax matters related to the supply of pulpwood to paper mills.

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