Fly ash blocks qualify for 5% GST under Entry 225B, not higher rate under Entry 453

Gujarat HC ruled that fly ash blocks are classifiable under Entry No. 225B of Schedule-I attracting 5% GST rate, not under Entry No. 453 of Schedule-III. The court relied on GST Council Circular No. 179/11/2022-GST clarifying that the 90% fly ash content condition applies only to fly ash aggregate, not to fly ash bricks or blocks. The condition was omitted from description w.e.f. 18.07.2022. Orders of Advance Ruling Authority and Appellate Authority were set aside, petition allowed.

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Issues Involved:

1. Classification and GST rate applicable to Fly Ash Bricks and Fly Ash Blocks.
2. Interpretation of Entry No. 225B and the condition of 90% fly ash content.
3. Validity of the Advance Ruling and Appellate Authority's decisions.

Issue-wise Detailed Analysis:

1. Classification and GST Rate Applicable to Fly Ash Bricks and Fly Ash Blocks:

The petitioner, a manufacturer of Fly Ash Bricks and Fly Ash Blocks, challenged the classification and applicable GST rate determined by the Advance Ruling Authority and the Appellate Authority. Initially, Fly Ash Bricks were classified under Entry No. 453 of Schedule-III and subjected to an 18% GST rate due to the interpretation that they contained less than 90% fly ash. The petitioner argued for classification under Entry No. 225B of Schedule-I, which prescribes a 5% GST rate, asserting that the condition of 90% or more fly ash content should not apply to Fly Ash Bricks.

2. Interpretation of Entry No. 225B and the Condition of 90% Fly Ash Content:

The core of the dispute was the interpretation of Entry No. 225B, which, as per Notification No. 24/2018, included "Fly ash bricks or fly ash aggregate with 90% or more fly ash content" under a 5% GST rate. The petitioner contended that the 90% fly ash content condition should only apply to fly ash aggregates, not to Fly Ash Bricks. This interpretation was supported by Circular No. 179/11/2022-GST dated 03.08.2022, which clarified that the 90% condition was applicable solely to fly ash aggregates, not to fly ash bricks or blocks. Consequently, the applicable GST rate for Fly Ash Bricks and Blocks manufactured by the petitioner was determined to be 5%.

3. Validity of the Advance Ruling and Appellate Authority's Decisions:

The petitioner argued that the Advance Ruling Authority and the Appellate Authority erred by applying the 90% fly ash content condition to Fly Ash Bricks, leading to a higher GST rate. The court found that the authorities had indeed misinterpreted the entry, as clarified by the subsequent circular. The court quashed the orders of both the Advance Ruling Authority and the Appellate Authority, ruling that the products manufactured by the petitioner were liable for a 5% GST rate as per the correct interpretation of Entry No. 225B.

Conclusion:

The court allowed the petition, setting aside the previous orders and confirming that the GST rate applicable to the petitioner's Fly Ash Bricks and Fly Ash Blocks is 5%, as clarified by the CBIC circular. The ruling emphasized the importance of accurate interpretation of legislative provisions and the role of clarifications in resolving classification disputes. No order as to costs was made.

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