2024 (2) TMI 169 - AAR - GST

Tree pruners classified as agricultural implements under HSN Code 82016000 qualify for GST exemption under entry 137

The AAR Karnataka classified tree pruners under HSN Code 82016000 as agricultural implements, qualifying for GST exemption. The Authority determined that ... Classification as agricultural implements - Tariff Heading 8201 / HSN 82016000 - Interpretation of 'pruners of any kind' in tariff entry - Exemption under Notification No. 2/2017-Central Tax (Rate) Entry No. 137 - Determination of liability to pay tax on supplyClassification as agricultural implements - Tariff Heading 8201 / HSN 82016000 - Tree pruners qualify as agricultural implements (hand tools) falling under Tariff Heading 8201 60 00 (HSN 82016000). - HELD THAT: - The Authority examined the product's nature - a predominantly aluminium, manually extendable pole fitted with a knife used for harvesting areca, pepper and coconut and for spraying pesticide - and found that classification can be by usage or by material. Applying the ordinary, common parlance understanding of 'implements' as tools used by human hands (as recognised by the Supreme Court), the tree pruner, used in agriculture for harvesting and operable manually, falls within the description of agricultural implements/hand tools under Chapter 82 and Tariff Heading 8201. The product's specific function as a pruner and its use by agriculturists led to its classification under HSN 82016000 as an agricultural implement. [Paras 10, 11, 12, 13]Tree pruners are agricultural implements within Tariff Heading 8201 6000 (HSN 82016000).Exemption under Notification No. 2/2017-Central Tax (Rate) Entry No. 137 - Interpretation of 'pruners of any kind' in tariff entry - Determination of liability to pay tax on supply - Supply of tree pruners is exempt from Central and State GST under Entry No. 137 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - Having held the goods to be agricultural implements falling under Tariff Heading 8201, the Authority considered Notification No. 2/2017-Central Tax (Rate), Entry No. 137, which exempts goods under Tariff Heading 8201, expressly including 'pruners of any kind'. Given that the product is a manually operated pruner used in agriculture and is captured by the expressive language of the entry, the supply of the tree pruners falls within the statutory exemption and is not liable to GST under the cited notification. [Paras 14, 15]Supply of the tree pruners is exempted under Entry No. 137 of Notification No. 2/2017-Central Tax (Rate).Final Conclusion: The Authority ruled that the applicant's tree pruners are agricultural implements within HSN 82016000 and that their supply is exempt from GST under Entry No. 137 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017. Issues involved: Classification of goods under HSN Code, Exemption under CGST/SGST/IGST Act.Classification of Goods:The applicant, a Partnership firm engaged in buying and selling 'Tree Pruners,' sought advance ruling on whether the product falls under HSN Code 82016000 relating to Agricultural implements. The product, a pole with a manual extension and knife, predominantly made of aluminium, is used for agricultural activities like harvesting areca, pepper, coconut, and spraying pesticide. The applicant argued that due to its specific use in agriculture, it should be classified as an agricultural implement under Tariff Heading 8201 6000.Exemption under CGST/SGST/IGST Act:The applicant also sought clarification on whether the supply of Tree Pruners to farmers is exempt from the CGST/SGST/IGST Act. The applicant contended that the product qualifies as an agricultural implement manually operated by human beings, falling under the exemption provided in Entry No. 137 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017.Findings & Discussion:The Authority considered the applicant's submissions and facts presented. It was noted that the product's composition primarily of aluminium and specific use in agriculture supported its classification as an agricultural implement. Referring to relevant legal precedents, including the Supreme Court and High Court judgments, the Authority concluded that the Tree Pruners indeed qualified as an agricultural tool under Tariff Heading 8201 6000. Additionally, the product fell within the exemption criteria specified in Entry No. 137 of the notification, thus making the supply of Tree Pruners exempt from taxation under the CGST/SGST/IGST Act.Ruling:a) Tree pruners under HSN Code 82016000 are classified as Agricultural implements manually operated or animal driven, falling under specific tools used in agriculture.b) The supply of Tree Pruners is exempted under Entry No. 137 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017.