Applicant denied concessional GST rate for supply chain; certification requirements not met

The applicant, M/s. Equitron Medica Private Limited, was denied the eligibility to sell products to dealers/distributors at a concessional GST rate of 5% under Notification Nos. 45/2017 and 47/2017. The applicant's practice of supplying goods to distributors who then sell to research institutions did not meet the conditions stipulated in the notifications, which require direct supply to research institutions along with specific certifications. Additionally, the question regarding the validity of certificates issued by end users was deemed outside the jurisdiction of the authority for an advance ruling under the GST Act.

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Issues Involved:
1. Eligibility to sell products to dealers/distributors by charging GST at 5% under Notification No. 45/2017 and 47/2017.
2. Validity of a certificate issued by the end user (scientific research organization) for invoicing products to dealers at a concessional rate of GST at 5%.

Detailed Analysis:

Issue 1: Eligibility to Sell Products to Dealers/Distributors by Charging GST at 5%

The applicant, M/s. Equitron Medica Private Limited, engaged in manufacturing laboratory medical equipment, sought clarification on whether they could sell their products to dealers/distributors at a concessional GST rate of 5% as per Notification Nos. 45/2017 and 47/2017. These notifications allow a reduced GST rate for supplies made to institutions engaged in scientific research.

The applicant argued that since the end use of their products is for scientific research, they should be allowed to sell to distributors at the concessional rate, provided a certificate from the end user (scientific research organization) is obtained. However, the jurisdictional officer contended that the applicant supplies goods to distributors at the standard GST rate of 18%, and the distributors, in turn, sell to research institutions at the concessional rate of 5%.

Upon examination, it was found that the applicant does not directly supply goods to the end users engaged in scientific research but to distributors who are involved in trading. The notifications in question require the goods to be supplied directly to the research institutions, along with a certificate from the head of the institution certifying the goods are for research purposes and will not be sold for five years. Since the applicant supplies to distributors and not directly to the end users, they do not fulfill the conditions stipulated in the notifications.

Conclusion:
The applicant cannot sell their products to dealers/distributors by charging GST at 5% as per Notification Nos. 45/2017 and 47/2017.

Issue 2: Validity of a Certificate Issued by the End User for Invoicing Products to Dealers at a Concessional Rate

The applicant also inquired whether a certificate issued by the end user (scientific research organization) mentioning the manufacturer and the seller could enable them to invoice their products to dealers at a concessional GST rate of 5%.

The authority examined whether this question falls under the purview of Section 97(2) of the CGST Act, which outlines the scope of questions that can be addressed in an advance ruling. Section 97(2) includes questions related to the classification of goods/services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, registration requirements, and whether an activity amounts to a supply of goods/services.

The authority found that the question regarding the validity of certificates issued by end users does not pertain to any of the matters mentioned in Section 97(2). Therefore, the authority does not have jurisdiction to pass a ruling on this issue.

Conclusion:
The question regarding the validity of a certificate issued by the end user is not maintainable under the provisions of the GST Act, and hence, no ruling can be provided on this matter.

Order:
1. The applicant cannot sell their products to dealers/distributors by charging GST at 5% as per Notification Nos. 45/2017 and 47/2017.
2. The question regarding the validity of a certificate issued by the end user is not maintainable and thus not answered.

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