TaxTMI 
TaxTMI 
2019 (10) TMI 1090
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....essories with HSNs under reference applicable to Tractors, Tillers and other farm equipments though such goods are sold to them under different HSNs attracting peak rate due to certain constraints. 3. The applicant is a registered dealer under the GST Act, 2017 engaged in the manufacture and marketing of Tractors and Tillers. These products exclusively used in the farm sectors for various agricultural activities. 3.1 Tractors and Tillers products predominantly fall under the below HSN codes which attract 12% consolidated GST (also referred to as "HSNs under reference'): HSN 8701- Tractors (except road tractors for semi-trailers of engine capacity more than 1800 cc); HSN 8432- Agricultural, horticultural or forestry machinery for soil preparation or cultivation; lawn or sports-ground rollers; Parts (8432 90); HSN 8433 - Harvesting or threshing machinery, including straw or fodder balers; grass or hay movers; machines for cleaning, sorting or grading eggs, fruit or other agricultural produce, other than machinery of heading 8437; parts (8433 90 00); HSN 8436 - Other agricultural, horticultural, forestry, poultry-keeping or bee keeping machinery, includin....
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....h higher tax but to levy only a mean rate of 12% and with exceptions 18%. 3.6 The applicant also states that as a convention Farm sector is taxed at lower or mean rate and the legislature in its wisdom has classified Tractors, Tillers and some of the parts and accessories under 12% GST bracket. The Government has vide Notification No. 12/2017 made certain exceptions and brought 15 specific tractor parts under 18% GST bracket so as to be effective from 18th August, 2017. It is however noted that few high value components, parts and accessories of tractors and tillers, which are also used by automobile sector generally gets taxed at peak rate of 28%. Hence the applicant states that they are constrained to pass on the burden as such to the farmers to the extent these are sold as spare parts. Hence farmers being the end users and without any scope for passing on the tax burden suffer the higher taxation. 3.7 The applicant states that at the same time, they as manufacturers of tillers and tractors are helpless in convincing their suppliers to charge them lower rate of 12% GST, as they sell the same products to other general automobile sectors also. However, most of such high value....
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....hereof 8708 10 10 Bumpers and parts thereof for tractor 6 8708 30 00 Parts and accessories of motor vehicles of hearing 8701 to 8705 Brakes and servo-brakes; arts thereof 8708 30 00 Brakes assembly and its parts thereof for tractors 7 8708 40 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Gear boxes and arts thereof 8708 40 00 Gear boxes and parts thereof for tractors 8 8708 50 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Drive-axles with differential, whether or not provided with other transmission components, non-driving axles; parts thereof 8708 50 00 Transaxles and its parts thereof for tractors 9 8708 70 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Road wheels and parts and accessories thereof 8708 70 00 Road wheels and parts and accessories thereof for tractors 10 8708 91 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Radiators and parts thereof 8708 91 00 (i) Radiator assembly for tractors and parts thereof (ii) Cooling system for tractor engine and parts thereof 11 8708 92 00 Parts and acces....
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.... to as VST hereinafter), are in the business of manufacturing and marketing of Tillers and Tractors for the past 50 years. Our products have an immense brand value in the market due to the high degree of quality we deliver to our customers. Our quality policy is driven by sole consideration of optimizing customer satisfaction in terns of utility and economies. We therefore strive innovatively to cater to the dynamic customer expectations and requirements. Such market expectations demand VST's product Development team to innovatively design our products and product engineering followed by stringent quality driven procurement policy. It is hence most of the inputs are made to VST design and for exclusive use of VST. To ensure no compromise in this regard, our suppliers are contractually obligated not to sell products manufactured to our specific design to anyone other than VST. Most of such inputs are either embossed with our Brand name or Drawing number or exclusive Part number for the sake of identification and prevention of misuse. It is therefore submitted that on the procurement front none of the exclusive parts manufactured could be generally bought a....
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.... sales and maintenance programs, there is no scope for our custom made parts being available in open markets for use other than in our equipments; However, the above undertaking excludes general items like Bearings, Fasteners including Washers, Electrical Fittings. V-belts, Name Boards, Number Plates, Mirrors." FINDINGS AND DISCUSSION: 5. We have considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri. Sowmithri, Consultant during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. 6. At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 7. The main issue here is the rate of tax applicable on the parts used or sold by the applicant. The applicant is a manufacturer of tractors and tillers and he purchases the said components and parts to be u....
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....applicant has undertaken that most of such inputs are embossed with their brand name or drawing number or exclusive part number for the sake of identification and prevention of misuse. Hence the applicant states that on the procurement front, none of the exclusive parts manufactured could be generally bought and sold in the open market. Further, the applicant also has undertaken that they have appointed exclusive dealers across the country and they are barred from dealing with any other brands of automobiles or related products other than their products. He has also undertaken that any maintenance or replacement of parts, etc. would always be through their delivery channels and in most instances, are directly fitted on to their equipments. As most of the parts are exclusively manufactured for their requirement and design and die to exclusivity of supply agreements, no usage alternatives would be available to their consumers. 7.4 The notification no. 19/2017 - Central Tax (Rate) dated 18^th August 2017 clearly mentions the products, their HSN Codes and if for tractors are taxed at 9% (CGST) and if not then they are taxed at appropriate rates for the said HSN. The notification red....