TaxTMI 
TaxTMI 
2019 (10) TMI 1090
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....e 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, including germination plant fitted with mechanical or thermal equipme....
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....ention 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 items, though identified generically are exclusively manufactured for our brands and can never be sold in open market for ....
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....rts 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 accessories of motor vehicles of hearings 8701 to 8705 - Silencers (mufflers) and exhaust pipes; arts thereof 8708 92 00 Silencer assembly for tractors and parts thereof 12 8708 93 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Clutches and arts thereo....
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....herefore 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 and sold in the open market. It is further incumbent upon us to ensure that we take onus of delivery of quality to our end customers, which could be achieved only by implementing a robust and fool proof delivery mechanism in place. We have therefore appointed Exclusive Dealers across the Country and by the terms of the Agreement, they are barred from not only dealing with any of our c....
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....dditional 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 used in the manufacture of the tractors and tillers and their suppliers, who are the manufacturers of such parts which are not specific to tractors and tillers, are charging them the rate applicable to the specific part and not as Tractor or tiller parts. 7.1 As per the Notification No. 19/2017- Central Tax (Rate) dated 18th August 2017, the entries serial no. 452A to 4520 have been inserted to the Schedule Ill appended to the said notification, prescribing the tax rat....
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....han 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 18th 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 reduces the rate of tax based on the usage and it is incumbent upon the supplier of these products to prove that they are for tractors only to take advantage of the said notification. 7.5 Regarding the first question relating to classification of parts of tillers, the applicant is classifying the same under HSN 8432 90 90. The Rotary tiller is covered under HSN 8432 80 20 and the parts of these tillers are generally covered under 8432 90 90. Section Note 2, to Section XVI, provides at (b) that parts which are suitable for use solely or prin....