RATE OF TAX ON DENTISTS' CHAIRS, INSTRUMENTS & APPLIANCES

[Sadanand Bulbule]

Dear experts,

Please clarify the HSN Code and the rate of GST with relevant notification issued by the GOI on the following goods:

1] Dentists' Chairs.

2] Instruments and appliances used in dental sciences.

If possible, any rulings on the classification of above goods rendered during pre or post GST regime.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Dear Sir, Dentists' Chairs and Instruments and appliances used in dental sciences are classified under HSN Code 9018 attracting Goods - Rates of Tax - Schedule 2 - IGST @ 12% - CGST @ 6% -SGST / UTGST @ 6% vide Notification No.1/17-CT(R) dated 28.6.17 as amended up to 28.2.23 (Notification No.3/23-CT(R) dated 28.2.23(at serial no.218).

Regarding case laws pertaining to pre-GST period, it will consume time. I shall share here at the earliest.

I

[KASTURI SETHI]

Dear Sir,

As per Notes No.1(ij) to Chapter 94of Central Excise Tariff Act, 1985 (as on 02.02.2017) Section XX Misc. Manufactured Articles Chapter 94does not cover, " dentists' chairs incorporating dental appliances of heading 9018 or dentists' spittoons (heading 9018).

 

 

[KASTURI SETHI]

Chapter No. 94 of Customs Tariff Act, 1975

Section Notes:

SECTION XX MISCELLANEOUS MANUFACTURED ARTICLES

NOTES :

1. This Chapter does not cover :

(a) pneumatic or water mattresses, pillows or cushions, of Chapter 39, 40 or 63;

(b) mirrors designed for placing on the floor or ground [for example, cheval -glasses (swing-mirrors)] of heading 7009;

(c) articles of Chapter 71;

(d) parts of general use as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39), or safes of heading 8303;

(e) furniture specially designed as parts of refrigerating or freezing equipment of heading 8418; furniture specially designed for sewing machines (heading 8452);

(f) ⁶[lamps or light sources and parts thereof] of Chapter 85;

(g) furniture specially designed as parts of apparatus of heading 8518 (heading 8518), of ¹[heading 8519 or 8521](heading 8522) or of headings 8525 to 8528 (heading 8529);

(h) articles of heading 8714;

(ij) dentists' chairs incorporating dental appliances of heading 9018 or dentists' spittoons (heading 9018);

(k) articles of Chapter 91 (for example, clocks and clock cases); ³[or]

(l) toy furniture or toy ⁷[luminaires and lighting fittings] (heading 9503), billiard tables or other furniture specially constructed for games (heading 9504), furniture for conjuring tricks or decorations (other than ⁸[lighting strings]) such as Chinese lanterns (heading 9505).⁴[or]

⁵[(m) monopods, bipods, tripods and similar articles (heading 9620)]

[Sadanand Bulbule]

Respected Sir

At the outset, thank you very much for your meaningful reply.

I have examined the Customs Tariff details appended to the Chapter No. 94 of the Customs Tariff Act, 1975 and it excludes some of the goods from the purview of the Chapter 94 as mentioned in your second reply. And one of such excluded goods are "dentists's chairs" incorporating dental appliances of heading 9018 or dentists' spittoons (heading 9018).

However, with such classification of goods under the Customs Tariff Act, 1975, which is internationally applicable, how the GST Notification No. 1/2017 could include " Dentists's Chairs" under the category of HSN 9402 attracting 18% tax on it and why it is not classified under HSN 9018 attracting 12% tax?

Few AAR have also ruled that " Medical furniture including dentists chairs are taxable @ 18% tax again based on the HSN 9402 only.

Is such classification of " Dentists' Chairs" when specifically excluded from the purview of Chapter 94 not against the Customs Tariff Act, 1975, being the base Act for all secondary statutes? Will it not pave the way for expensive litigation?

Section 9[1] of the CGST Act authorizes the GOI to notify the rates of tax. But it cannot authorize the GOI to amend the CTH or translocate the entries therein. So naturally following sub-questions arise:

Can the notification issued under the GST Act override the Customs Tariff Act, 1975?

Whether the adjudicating authorities are required to follow the notification issued by the GOI or the Customs Tariff Act to determine the correct rate of tax under Section 73/74 of the GST Act?

Here is a huge scope to throw flood light on the above questions. Experts to explore the possibilities

[Sadanand Bulbule]

Dear all

The taxpayers having classified " Dentists' Chairs" under HSN 9018 [eligible for 12% tax] genuinely relying on the Customs Tariff Act,1975 are facing fiery notices issued by the department. There is no change in the Customs Tariff Act, 1975 as far as this issue is concerned post GST regime. So I take this opportunity to draw the deep attention of the Hon'ble CBIC and the GOI to clarify the real position with a big picture to avoid needless litigation. Otherwise the taxpayers would bleed as usual due to massive confusion created. Dark clouds surrounding this issue need to be melted down paving the way for bright sunlight.

This is purely my personal opinion subject to self-correction.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, My views are as under :-

Q. No.1 :Can the notification issued under the GST Act override the Customs Tariff Act, 1975 ?

Ans. No. There should be harmony between Act and Notification. The Central Govt. has power to increase or decrease rate of duty or grant full exemption or conditional exemption inasmuch as the guiding factor is public interest and monitoring economy of the nation. See judgement of Supreme Court in the case of UOI Vs. Jalyan Udyog reported as 1993 (9) TMI 108 - SUPREME COURT.

." Section 25(1) is a part of the enactment and must be construed harmoniously with the other provisions of the Act. The power of exemption is variously described as conditional legislation [See Jalan Trading Co. Pvt. Ltd. v. Mill Mazdoor Sabha (1966 (8) TMI 64 - SUPREME COURT) and Hamdard Dawakhana v. Union of India (1959 (12) TMI 41 - SUPREME COURT)] and also as a species of delegated legislation. Whether it is one or the other, it is a power given to the Central Government to be exercised in public interest. Such a provision has become a standard feature in several enactments and in particular, taxing enactments. Since the Parliament cannot constantly monitor the needs of and the emerging trends in the economy and is in no position to engage itself in day-to-day regulation and adjustment of import-export trade accordingly, power is conferred upon the Central Government to provide for exemption from duty of goods, either wholly or partly and with or without conditions, as may be called for in public interest. We see no warrant for reading any limitation into this power. If the public interest demands that the exemption should be absolute, the Central Government can do so. Similarly, if the public interest demands that exemption should be granted only subject to certain conditions it can provide such conditions. Then again if the public interest demands that conditions specified should relate to a stage subsequent to the date of clearance it can do so. The guiding factor is the public interest. The power given by Section 25 to the Central Government to specify conditions which may even relate to a stage subsequent to the clearance of goods clearly shows that the power of exemption can be used even for altering the relevant date prescribed by Section 15. It is this very position which has been clarified by sub-section (3) introduced in the year 1983. In our opinion, sub-section (3) does not provide anything new. It merely elucidates and makes express what is implicit in sub-sections (1) and (2). We are equally unable to agree that a legal fiction can be created only by a legislature and not by the executive. Here the Central Government is exercising a power conferred upon it by the Parliament. The provision conferring such power does contemplate and empower the Central Government to create such a fiction, as explained hereinabove. Sub-section (1) as well as sub-section (3) place the matter beyond any doubt. To repeat, the nature of power under Section 25 is conditional legislation or a species of delegated legislation : an exemption notification under Section 25 is not an executive act. No decision has been brought to our notice in support of the said contention - which is raised only in the written submissions. [paras 22, 23]

Q. No. 2 :Whether the adjudicating authorities are required to follow the notification issued by the GOI or the Customs Tariff Act to determine the correct rate of tax under Section 73/74 of the GST Act ?

Ans. The Adjudicating Authorities should use their cognitive powers !

(To be continued)

[Sadanand Bulbule]

Dear Sir

The CEGAT,New Delhi in its ruling dated 13/06/1997 rendered in the case of Dental & Surgical Equipment Co Pvt Ltd Vs. Collector of Customs,Bombay [1997 (6) TMI 230] has held that, "Dentists' chair when incorporates dental equipment would be classifiable under HSN 9018".

Since there is no change in the Customs Tariff Act,1975, in my considered opinion, the ratio of the above ruling shall apply for the purpose of the GST Act and eligible for 12% tax on "Dentists' Chair incorporating dental equipment like spittoons etc",which are excluded from the CTH Chapter 94.

Secondly, whenever there is legal fiction in the interpretation of the statutes, the benefit should always go to the assessee.

Experts are invited to offer comments.

[KASTURI SETHI]

In continuation of my earlier reply, Dentist's chair/Dental Chair cannot be classified under Chapter 94 which is meant for articles of furniture etc. on the following grounds

(i) Dental Chair is not an article of furniture because it is special kind of tool without which a dental surgeon would not be able to perform his job as a dental surgeon --- (Sale Tax Case ) State of Gujarat Vs. Lax Tools Manufacturing reported as 1978 (12) TMI 175 - GUJARAT HIGH COURT.

(ii) Dental chair's primary purpose is NOT to enable the patient to sit comfortably in it but to enable the dentist to give proper treatment to his patients. Dental chair cannot be regarded an item of furniture but as a specially designed equipment to enable proper dental treatment to be given to patients----CST Vs. Associated Dental & Medical Supply--1975 (11) TMI 140 - BOMBAY HIGH COURT.

(iii) Basic character, function and use is more important than name used in trade parlance -----Supreme Court in the case of CCE Vs. International Tobacco reported as 2008 (9) TMI 66 - SUPREME COURTHere the end use is treatment of teeth using Dentist's chair and Dental chair.

While using the articles of furniture we feel relaxed, cosy, comfortable, stress-free and enjoy . whereas while using dentist' s chair or dental chair we do not feel such relaxation, comfort and enjoyment. The purpose of both the chairs is treatment of teeth. Hence these chairs have been specifically excluded from Chapter 94 since the enactment of Central Excise Tariff Act, 1985 i.e. 28.2.1986 and the same language has been carried forward in GST regime by way of Customs Tariff Act, 1975.

To be continued

[KASTURI SETHI]

Dear Sir,

BURDEN OF PROOF

If the department wants to classify goods in a tariff bearing higher rate of duty, the burden of proof is on the department to establish the same.-----Bombay High Court in the case of Kirloskar Oil Engines Ltd. Vs. UOI - 1990 (9) TMI 89  and 2000 (6) TMI 474 - CEGAT, KOLKATA Bhairamal Gopiram Vs. CCE, 2014 (12) TMI 33 - CESTAT MUMBAI

Onus of establishing that an article falls in a particular tariff lay upon the Revenue-----Even if evidence produced by the assessee is rejected, the appeal of the assessee has to be allowed as the revenue has not discharged the onus of establishing a classification----Supreme Court in the case of Hindustan Ferodo Ltd. Vs.CCE 1996 (12) TMI 49 - SUPREME COURT,  CCE Vs. Vicco Laboratories - 2004 (12) TMI 92 - SUPREME COURT and relied in

Relied in 2021 (12) TMI 490 - CESTAT MUMBAI

Relied in 2022 (1) TMI 468 - CESTAT AHMEDABAD

Relied in 2021 (12) TMI 13 - CESTAT NEW DELHI

Referred in 2022 (2) TMI 854 - CESTAT ALLAHBAD

Relied in 2022 (5) TMI 1393 - CESTAT MUMBAI

Relied in 2022 (6) TMI 928 - CESTAT MUMBAI

Relied in 2017 (5) TMI 592 - SUPREME COURT

Followed in 2016 (10) TMI 665 - CESTAT NEW DELHI

To be continued.

[KASTURI SETHI]

Dear Sir,

Relevance of end-use for classification of the goods

Where the classification is related to the function of the goods, the predominant use of those goods is very important and relevant----CEGAT in the case of Union Carbide Vs.CC reported as 1985 (10) TMI 195 - CEGAT, NEW DELHI.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, With reference to our above discussion, I further opine as under :

Chapter Note of Chapter 94 Of Customs Tariff Act,1975 which excludes Dentists'. Chairs from Chater 94 for classification under Chapter/Heading No. 9018, is part of the Customs Tariff Act, 1975. Since Chapter Notes and Section notes are part of the Act and these have full statutory backing, so these Section Notes and Chapter Notes have an overriding force over the respective headings and sub headings. It has been held so in a plethora of judgements including Hon'ble Supreme Court. Hence I am of the view that if dentist chair is used for the purpose other than dental treatment, it will be classified under 94 and if it is used for dental treatment it is classifiable under 9018. For example Dentist chairs which are used in offices, conference rooms, exhibitions, social functions etc. The best , example is that the host of KBC Quiz programme and the contestants both use Dentist Chair for the purpose other than dental treatment. Such dentist chair will attract GST @18% (keeping in view use as an article of furniture) and the dentist's chair for use by doctors in clinic will attract GST @12% as per Chater 94 and Chapter 90 respectively read with Notification No.1/17-CT(R) as amended.

Disclaimer

All the above replies posted above contain my personal views and are for educational and instructional purpose with an intent to enlarge horizon of knowledge on the issue of the visitors of TMI website. My above views are not meant for legal/court purpose.

[KASTURI SETHI]

Here it is pertinent to mention that, "Rules and Notification cannot override an Act and cannot be derogatory to the object of the Act".-------Supreme Court in the case of UOI Vs. Jalyan Udyog - 1993 (9) TMI 108 - SUPREME COURT

[Sadanand Bulbule]

Dear Sir ji

One question, many answers!

I am overwhelmed by your continuous replies which reflect your deep efforts to give the strong and functional opinions even for a weak question. You have shown that, the truth of law is always beautiful. You have never kept the cards close to your chest. So you have placed them on the table.Your such legacy is doing great service to the needy. You have high confidence in judicial judgements which have upheld the incontrovertible truth of facts.

Sir, you have changed the format of answering the query--raising the bar of excellence.Your contribution to TMI is really magnificent. The visitors of TMI are truly enriched including me. May your tribe increase.

I remain grateful.

Warmest regards.

[Sadanand Bulbule]

Dear all

My personal conclusion on “Dentists’ chairs incorporating dental appliances of heading 9018 or dentists' spittoons (heading 9018) is as under:

A. The rates of tax imposed on goods by the GST Act are governed by the Customs Tariff Act, 1975, classifiable under specific HSN/CTH Code or any law/notification relating to the Customs Act enacted and in force at any time since the first day of July 2017. And they shall be deemed to have been always binding upon the assessees and the adjudicating authorities under the GST Act in respect of those goods.

B. From the analysis of all the above replies, it is gathered that the immunity of 12% GST stands extended to “Dentists' chairs incorporating dental appliances of heading 9018 or dentists' spittoons (heading 9018) in terms of Notification No. 1/2017. When properly interpreted the opening statutory notes appended to the Chapter 94 of the Customs Tariff Act, 1975 would mean that the immunity of 12% tax granted by the GOI on recommendation of the GST Council is only in respect of “Dentists' chairs incorporating dental appliances of heading 9018 or dentists' spittoons (heading 9018).

C. In other words, there is no such immunity of 12% tax to the Dentists’ chairs notincorporating dental appliances or dentists’ spittoons and they, therefore, continue to be taxable @ 18% under HSN 9402. Thus it is a conditional immunity of 12% tax. This distinguishing condition has to be borne in mind in view of the opening statutory notes contained in Chapter 94 of the Customs Tariff Act, 1975.

D. It will appear that Chapter 94 of the Customs Tariff Act, 1975 has made elaborate provisions to exclude some of the specific goods from the purview of HSN 9402 for specific reasons in the wisdom of Parliament. Thus there can be no manner of doubt on the rate of @12% tax on Dentists' chairs incorporating dental appliances of heading 9018 or dentists' spittoons (HSN 9018).

[KASTURI SETHI]

I

Sh.Sadanand Bulbule Ji,

Sir, First of all, I am highly thankful to you for your compliments. Further, question is one and answer is also one inasmuch as it is posted in piecemeal. I always avoid lengthy answer. If the answer is brief, the element of interest persists otherwise nobody has time to peruse a lengthy answer. Only the querist will read a lengthy answer and not other visitors. I always follow the phrase, ''Brevity is the Soul of Wit''. coined by Shakespeare and used as dialogue in his play, 'Hamlet' .

Regarding 'not keeping the cards close to your chest' I am of the firm belief that knowledge is power, if shared otherwise it will rust.

Sir, Your question cannot be termed as weak question. Your question is thought provoking and challenging and interesting which will solve the problem of other readers/assessees. No question is weak. It opens new avenues for further search. Thus you enrich yourself and the readers.

Thanks and regards for your best wishes. I am also indebted to you for devoting your precious time for studying my replies word for word. Really you have boosted my morale.

[KASTURI SETHI]

Sh. Sadanand Bulbule Ji,

Sir, This is with reference to conclusion arrived at serial number 14 dated 15.9.23, after delving into your interpretation, analysis and conclusion there is not even an iota of doubt that Dentists' Chairs used specifically for dental treatment by the dentist is classifiable under Chapter/Heading No. 9018 attracting GST @ 12% and these cannot be classified under Chapter 94, these being specifically excluded from Chapter 94. 

Notification No.1/17-CT(R) dated 28.6.17 (as amended) is aligned with the Customs Tariff Act as made applicable to GST Acts. Hence it cannot be read in isolation from the Tariff Act. This notification is not independent of the Customs Tariff Act /GST ACTs

Sir, If your client has received Audit Report or SCN demanding GST @ 18% for Dentists' Chair the matter should be brought to the Notice of the Chairperson, GST Council on the basis of your conclusion arrived at after a lot of deliberations.

On the basis of your conclusion I am cock-sure that your client is very strong on merits and the issue must be fought

[Sadanand Bulbule]

Dear Sir ji

You have dispelled all the dark clouds surrounding this query and brought back the bright sun-shine. The huge tax dust gathered on the Dentists' chairs is removed once for all.

Taxes do not stem from fictional or disinformed or polluted interpretation of facts. Rather it misleads. Synthetic interpretation of facts has dangerous implications. Taxation is not a game to hit the jackpot. Tax Adjudication is a process of sensible conversation on records with empirical evidence. With this, I request all the stake-holders to derive the best benefit of this marathon discussion.

Once I remain grateful to Sri. K L Sethi sir ji for spreading his deep knowledge on TMI.

[Sadanand Bulbule]

Dear all

Please refer the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act,1975.

And also refer the judgement dated March 29, 2023 of the Hon’ble Supreme Court rendered in the case of CCE, Aurangabad Vs. Videocon Industries Ltd reported in 2023 (3) TMI 1338

 

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, I have perused the judgement of Hon'ble Supreme Court posted at serial no. 18 dated 17.9.23. Since analogy is the same , this judgement is squarely applicable to the issue raised by you. This judgment will serve as cherry on the cake and hence will further cement your reply to the letter or SCN. So you must place reliance on this judgement also.

[KALLESHAMURTHY MURTHY K.N.]

Sri Sadanand Bulbule Sir,

I have read the discussions on TMI relating to the rate of tax applicable to the Dentist's Chair. You are well aware of the Notification 1/ 2017 dt. 28-06-2017 wherein under Schedule for tariff 9% under CGST Act classified the Dentist's Chair under ordinary furniture. No doubt Dentist's chair is not to be called as furniture but a piece of medical equipment. But the question is not about the nomenclature but about the rate of tax to be charged on a dentist's chair. Sri Kasturi Sethi Ji and you have discussed very well with relevant provisions. My question is, leaving the provision of the Excise Tariff Rate and the provisions under GST, which put confusion in deciding the rate of tax by the Audit Officer or Adjudicating Authority. The Dentist's Chair is not directly classified with its name but is just mentioned under examples in brackets in the Notification. However, what was the intention of the Council to bring it into the tax rate of 18% or as per discussions on the TMI Forum it is taxable goods at the rate of 12%?

AI Summary

Classification of dentists' chairs as medical instruments determines lower GST liability under HSN 9018 versus furniture rates. Dentists' chairs that incorporate dental appliances or spittoons are excluded from Chapter 94 by Chapter Note 1(ij) of the Customs Tariff Act, 1975 and, based on functional character and predominant use, are classifiable under HSN 9018 (instruments and appliances used in dental sciences) for GST purposes. Notifications setting GST rates must harmonize with the Customs Tariff Act and cannot override chapter or section notes. Where classification is doubtful the revenue bears the onus and the assessee gains the benefit of doubt; authoritative classification or judicial remedies may be pursued to resolve disputes.