2021 (1) TMI 700 - AAR - GST

Application on Wheel Side Protection and Pantograph Classification Barred Under Section 98(2) CGST Act Due to Ongoing Investigation

In Re: M/s. Faiveley Transport Rail Technologies India Limited

The AAR held that the application challenging the classification of Wheel Side Protection Control Unit and Pantograph under CTH 8607 was inadmissible ... Classification of goods - Wheel Side Protection Control Unit (WSP) and Pantograph - to be classified as “parts of railway or tramway locomotives or rolling stock, and parts thereof’ (Viz under Heading 8607) for the purposes of levy of GST or otherwise - Section 9(1) of Central Goods and Services Act 2017 read with notification no.01/2017-Central Tax (Rate) dated 28.06.2017. Admissibility of the application under Section 97/98 of the CGST Act - HELD THAT:- The question raised is on the classification of the product supplied by the applicant and therefore covered under Section 97 (2) of the Act. Section 98 of the CGST Act 2017/TNGST Act 2017 provides the procedure to be followed on receipt of the application and the first proviso to Section 98(2) states that the application is not to be admitted when the question raised in the application is already pending or decided in any proceedings in the applicant’s case - In the case at hand, it is found that DGGSTI has submitted that the classification of the products supplied by the applicant to railways are under investigations and the investigations have been initiated through the summon dated 10.10.2018. It is the submission of DGGSTI, HRU Hosur that the question raised before this authority is part of the investigation and therefore the application do not merit admission. The first proviso to Section 98(2) makes an application ineligible for admission if the Authority finds that the question raised in the application is already pending or decided in any proceedings’ in the case of the applicant under any provisions of this Act. Issuance of summon under Section 70 of the CGST Act 2017 and calling for definite particulars happens in the course of investigation. We find that the only contention of the applicant is the summon is generic in nature and the subject goods whose classification is sought before us was never part of the proceedings. The applicant has classified `Pantograph’ under CTH 8607 and continues to do so while in respect of certain other products, they have re-classified and paid the differential taxes. The month-wise value in respect of ‘Pantograph’ has been furnished by the applicant to DGGSTI Hosur. Show Cause Notice No.02/2020 dated 18.06.2020, Corrigendum issued to the SCN dated 27.10.2020 seek the differential excise duty payable and the proceedings for the period from 01.07.2017 remains pending. DGGSTI, Hosur letter dated 23.11.2020 has categorically stated that the investigation is specific for the classification of goods for railways and covers all goods supplied by the applicant to railways under Chapter Heading 8607 and in respect of subject goods, it is stated that WSP was not in the list of products prior to GST and the spares for WSP was re-classified by the applicant from CETH 8607 to CETH 9032; while in respect of ‘Pantograph’, the investigation included the same and re-classification of the same for pre-GST period is issued through corrigendum dated 27.10.2020 - it is clear that DGGSTI has taken up investigations on the classifications adopted by the applicant on their supplies to Indian Railways and classified under CTH 8607. The subject goods are supplied to `Indian Railways’ and the applicant classify the same under CTH 8607. The application is filed on 20.01.2020 while the proceedings on the ‘Classification of the goods supplied to Indian Railways’ and the ‘rate adopted for payment of GST’ were initiated through summon dated 10.10.2018. Also from the list of parts given to the DGGSTI by the applicant, it is seen that details relating to ‘Pantograph and Parts’ is also furnished. The applicant claims that the DGGSTI did not contend the classification of ‘Pantograph’ and therefore the said goods were never a part of the investigation. The first proviso to Section 98(2) of the Act, states that where the question raised is pending or decided in any proceedings under this Act, the same is not eligible for admission before this authority. The investigation initiated by DGGSTI in the case of applicant is on the classification and rate of GST adopted by the applicant on the supplies to Indian Railways, classifying under CTH 8607. It is without doubt that the applicant has been classifying the subject goods under CTH 8607 and the supplies are made to ‘Indian Railways’ and therefore we are unable to agree the contention that the investigation is ‘generic’, while we find the investigation is on the ‘class of products’ classified under CTH 8607 and supplied to ‘Indian Railways’. ISSUES: Whether the Wheel Side Protection Control Unit (WSP) and Pantograph supplied should be classified as 'parts of railway or tramway locomotives or rolling stock, and parts thereof' under Heading 8607 for GST levy purposes.Whether the application for advance ruling on classification is admissible under Section 97/98 of the CGST Act 2017, considering ongoing investigations by the Directorate General of GST Intelligence (DGGSTI) on classification of goods supplied by the applicant. RULINGS / HOLDINGS: On classification: The applicant contended that WSP and Pantograph are 'parts of railway or tramway locomotives or rolling stock' within Heading 8607, as they are 'suitable for use solely or principally with the railway or tramway locomotives or rolling stock' and not covered under Note 2 to Section XVII, thus meeting the conditions for classification under Heading 8607.On admissibility: The application for advance ruling is not admitted under the first proviso to Section 98(2) of the CGST Act 2017, because the question raised is already pending in proceedings before the DGGSTI, which initiated investigations prior to the filing of the application, including classification of goods under Heading 8607 supplied to Indian Railways. RATIONALE: The legal framework applied includes Section 9(1), Section 97, and Section 98 of the Central Goods and Services Tax Act 2017, the Customs Tariff Act (Section XVII and Chapter 86), and relevant notifications and circulars governing classification of goods for GST purposes.Chapter Heading 8607 covers 'parts of railway or tramway locomotives or rolling stock,' including brake gear and other components 'suitable for use solely or principally' with such vehicles, as per Note 3 to Section XVII and excluding goods specified in Note 2.The applicant's submissions detailed the technical constitution and exclusive railway use of WSP and Pantograph, supported by precedent case law and circulars confirming classification under Heading 8607 for railway-specific parts.Regarding admissibility, the first proviso to Section 98(2) CGST Act prohibits admission of applications where the question raised is 'already pending or decided in any proceedings' under the Act. The summons and investigations initiated by DGGSTI from 10.10.2018 specifically cover classification and GST rate adopted for goods supplied to Indian Railways under Heading 8607, including the subject goods.Despite the applicant's contention that the investigation was generic and did not specifically include WSP and Pantograph, the authority found that classification of these products was part of the investigation, as evidenced by summons, statements, and show cause notices issued prior to the application.The issuance of a corrigendum to the show cause notice post-application filing was noted but did not alter the status of pending proceedings under the CGST Act for admissibility purposes.Consequently, the application was rejected on the ground of inadmissibility due to ongoing proceedings on the same question before another authority, consistent with statutory provisions and precedent.