2019 (10) TMI 867 - AAR - GST

Wood for pulping reclassified under HSN code 4403 for GST, not 4401. Ruling clarifies tax rates.

In Re: M/s. West Coast Paper Mills Ltd.

The Authority for Advance Ruling determined that the wood meant for pulping, including debarked eucalyptus, acacia, casuarina, and subabul wood, should be ... Rate of GST - Classification of goods - Debarked Eucalyptus Wood - Debarked Acacia Wood - Casuarina Wood - Subabul Wood - The commodity in question is poles of wood of length 4 to 5 feet and may or may not contain bark and these are covered under Chapter 44 of the Customs Tariff - whether they are covered under HSN 4401 or 4403? - HELD THAT:- The goods in question is a wood in the rough, whether or not stripped of bark and hence is covered under the Heading 4403. Since they are split they cannot be covered under Heading 4404. The goods in question are covered by the heading 4403 and hence are covered under entry no. 134 of Schedule III to the Notification No.01/2017 - Central Tax (Rate) dated 28.06.2017 and liable to tax at 9% under the CGST Act, 2017 - Similarly, the same are covered under entry no. 134 of Schedule III to Notification (01/2017) FD 48 CSL 2017 dated 29.06.2017 and liable to tax at 9% under the Karnataka Goods and Services Tax Act, 2017 - The IGST Rate applicable on the inter-State supplies of these goods is 18% under entry no. 134 of Notification No. 01/2017 - Integrated Tax (Rate) dated 28.06.2017. Issues Involved:1. Determination of the applicable GST rate on different types of wood meant for pulping.2. Classification of the wood under the appropriate Harmonized System of Nomenclature (HSN) code.3. Clarification on the tax treatment under the CGST, SGST, and IGST Acts.Issue-wise Detailed Analysis:1. Determination of the applicable GST rate on different types of wood meant for pulping:The applicant, a manufacturer of paper and paperboards, sought an advance ruling on the GST rate applicable to various types of wood used for pulping, including debarked eucalyptus wood, debarked acacia wood, casuarina wood, and subabul wood. The applicant argued that these types of wood should be classified under HSN code 4401, thus attracting a lower GST rate of 2.5% under CGST and SGST, as they are considered wood waste and scrap.2. Classification of the wood under the appropriate HSN code:The Authority for Advance Ruling (AAR) examined the classification of the wood in question. The applicant contended that the wood purchased for pulping is residual or scrap left over from trees, which should fall under HSN code 4401. However, the AAR noted that the wood in question is poles of wood of length 4 to 5 feet, which do not qualify as fuel wood, wood in chips or particles, sawdust, or wood waste and scrap under HSN code 4401. Instead, the AAR determined that the wood should be classified under HSN code 4403, which covers 'wood in the rough, whether or not stripped of bark or sapwood, or roughly squared.'3. Clarification on the tax treatment under the CGST, SGST, and IGST Acts:Based on the classification under HSN code 4403, the AAR concluded that the wood in question falls under entry no. 134 of Schedule III to Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017. Consequently, the applicable GST rates are:- 9% under the CGST Act.- 9% under the KGST Act.- 18% under the IGST Act for inter-State supplies.Conclusion:The AAR ruled that the pulpwood supplied to the applicant is covered under HSN code 4403 and is liable to tax at the following rates:1. 9% under the CGST Act as per entry no. 134 of Schedule III to the Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017.2. 9% under the KGST Act as per entry no. 134 of Schedule III to the Notification (01/2017) FD 48 CSL 2017 dated 29.06.2017.3. 18% under the IGST Act as per entry no. 134 of Notification No. 01/2017 - Integrated Tax (Rate) dated 28.06.2017.