2018 (12) TMI 142 – AUTHORITY FOR ADVANCE RULING – CHHATTISGARH – 2018 (18) G. S. T. L. 825 (A. A. R. – GST) – Classification of goods – rate of GST – Neem Seed – neem seeds in frozen or dried form – neem seed powder – classification under HSN Code 1211 – whether classified under 0% GST Rate or 5% CST Rate – Held that:- From the entries under HSN code 1211 there is no ambiguity that Plants and parts of plants (including seed and fruits) used as “fresh or chilled” would be tax free, whereas plants and parts of plants (including seed and fruits) used as “frozen or dried, whether or not cut, crushed or powdered” would be taxable @ 5% GST – It is also observed that under HSN code – 1209, the Seed useful for sowing i.e. 'Seeds, fruit and spores of a kind used for sowing' is tax free. The crucial determination point here in this entry is the word 'sowing'. Thus in case the quality of seed is not suitable for sowing, it cannot be treated as of seed quality, thereby making it exigible to GST
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applicant and the said seeds being not of seed quality, supplied by the agro-division business of the applicant would merit being taxable at 2.5% SGST and 2.5% CGST.
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Supply of neem seed powder for the intended purpose as specified by the applicant, supplied by the agro-division business of the applicant would be taxable at 2.5% SGST and 2.5% CGST. – STC/AAR/04/2018 Dated:- 5-9-2018 – Shri S.K. Buxy and Rajesh Kumar Singh, Members ORDER Proceedings : The applicant M/s G.N. Chemicals, 27/13, Nehru Nagar-West, Bhilai, (C.G.) GSTIN 22AAFFG5162J1ZJ has filed the application U/s 97 of the Chhattisgarh Goods & Services Tax Act, 2017 requesting advance ruling as regards levy of GST Rate applicable in case of "Neem Seed", classified under HSN Code 1211, placed both under 0% GST Rate and 5% CST Rate, on the condition that "All goods of seed quality" are classifiable under 0% GST Rate, whereas "All goods other than Seed quality" shall be classified under 5
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andardized & International Product Classification System developed by World Customs Organization (WCO) and this HSN Code is being followed since 1986 to classify commodities for Customs and Central Excise, and now for GST classification as well. Neem Seed is categorized under HSN Code 12119014 under Indian Trade Classification (HS) – 2017. Description of the Chapter 12 of ITC – HS Code reads as below : – "OIL SEEDS AND OLEAGINOUS FRUITS; MISCELLANEOUS GRAINS, SEEDS AND FRLIIT; INDUSTRIAL OR MEDICINAL PLANTS; STRAW AND FODDER" (iii) that, on carefully reading the Chapter description the apt placement of semi-colons and commas amply explains the types of goods & application of such goods covered by this classification under chapter 12 and the same is as below :- Type Meaning Oil Seed Seed that yields Oil Oleaginous Fruit Oily, or Rich in Oil, or Covered with Oil, or Producing Oil An oleaginous fruit is the part of a plant that is used to produce oil. It can be a fruit (
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lly places Neem Seed under HSN code 12119014. (v) that, had the intention of law-makers was to just exempt Neem Seed used solely for the purpose of sowing, they would have placed Neem seed in HSN code 1209 (which is placed in Nil Rate classification), however, they have placed neem seed in HSN Code 1211 – the Heading title of which explicitly confirms the application of seeds to be not just for sowing purpose. (vi) thus, Neem Seed is to be classified under 12119014 irrespective of whether Neem Seed is used for sowing or for Industrial of medicinal purpose. (vii) Now HSN Code 1211 is placed under Nil GST Rate category as well as 5% GST Rate category with the distinction as below :- Chapter 12 All goods of Seed quality All goods other than seed quality Neem Seed 1211 1211 CST Rate 0% 5% "The titles of section and chapter are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the heading and any relative section or ch
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cific words are not defined, common parlance/ trade parlance is to be given precedence. Understanding of HSN documents in conjunction with the applicable general interpretational rules have been humbly submitted. Therefore it was their contention that Neem Seed (in all forms) to be classified under 0% GST Tax slab. 5. Thus we find that M/s. G.N. Chemicals, 27/13 Nehru Nagar West, Bhilai, (C.G,) 490020, GSTIN 22AAFFG5162J1ZJ, the applicant is seeking clarity as regards the applicable rates for payment of GST on the aforesaid commodity that is Neem Seed, viz. whether the applicable rates should be @ 0% or 5%. 6. The legal position, Analysis and Discussion :- 6.1 The provisions for implementing the CGST Act and CGGST Act, 2017 are similar. Now we sequentially discuss the provisions that are applicable in the present case. 6.2 The following facts have been mentioned in the report received from the jurisdictional Office of the applicant i.e. O/o Assistant Commissioner, Circle-2 Durg, with r
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in vegetable preparation, Neem is widely used for medicinal properties. Neem products are believed by Siddha and Ayurveda practitioners to be anthelmintic, antifungal, antidiabetic, antibacterial, anti viral, contraceptive and sedative. Neem is a key ingredient in Non-Pesticidal Management (NPM), providing a natural alternative to synthetic pesticides. It goes beyond doubt that Neem is widely used in perfumery, in pharmacy or for insecticidal, fungicidal or similar purpose. Therefore it falls in HSN Code 1211 which contains "Plants and parts of plants (including seed and fruits), of a kind used primarily in perfumery in pharmacy or for insecticidal, fungicidal or similar purpose, frozen or dried, whether or not cut, crushed or powdered" and the rate of tax on items falling under this heading is 5% that is 2.5% CGST 2.5% SGST. However, there are two entries in HSN code 1211, one is of 0% GST and another is of 5% GST. Both of these entries are extracted here for the sake of ma
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possess its own quality in terms of physical, physiological, genetic and health aspects. Seed quality is a relative term and means the degree of excellence when compared to an acceptable standard. The seeds having required standards of purity, germination and other attributes are referred to as quality seeds- Thus this chapter itself makes a very wide distinction at the outset between seeds per se and seed quality at the outset. The applicant's other queries are about rate of tax on organic manure made up of Neem cannot be answered here due to lack of disclosure of procedure involved in making of manure. Unless it is determined that the manure made by the applicant is organic, it's needless to give opinion on it. 6.3 To sum up in the opinion of jurisdictional officer following would be the answer of the applicant's queries :- (i) Trading of Neem Seed in "fresh or chilled" form would attract 0% of GST, whereas when traded as "frozen or dried" form would a
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Seed commercially. The entry in HSN code 1209 (Seeds, fruit and spores of a kind used for sowing) includes all types of Neem Seed, whether for sowing or other uses and should be approved under tax free category. 6.6 The applicant has not come up with any evidence or logical explanation to substantiate their above contention. It has been unambiguously clarified in each entry mentioned in the schedules, issued under State and Central GST Acts as regard the applicable tax rate on any goods/ service along with the conditions and circumstances under which such goods/service shall be classified as tax free or taxable under specific tax slab. The following two pre-conditions need fulfillment for categorizing the neem seed so supplied by the applicant as tax free, as stipulated under HSN code 1211 – HSN DESCRIPTION RATE OF TAX 1211 Plants and parts of plants (including seed and fruits), of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purpose, froze
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n this regard, the Government of India has enforced the Seeds Act, 1966 in which Section 5 to Section 9 clearly stipulate the provisions for authentication of seed quality on the basis of which any seed would be defined as 'tax free seed for sowing.' 6.8 Seeds are the foundation of agriculture. Seed quality plays an important role in the production of agronomic and horticultural crops. Characteristics such as trueness to variety, germination percentage, purity, vigour, and appearance are important to farmers planting crops. Seed quality is the degree of excellence in regard to the characteristics referred to above that determines the seed quality. If the seed lot possesses high genetic purity and high germination percentage and is inter alia free from diseases, it is categorized as possessing high quality. Generally the standards fixed for certified seeds are considered of having quality standards. It implies that if a seed lot meets the certification standards, it is a good qu
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d by the applicant, the goods intended to be supplied by the applicant can by no stretch of imagination be categorized as those attracting tax @ 0%. 6.10 The applicant during the course of hearing stated that they would make neem oil from the kernel of neem which they would acquire from the collection of dry neem fruits or purchase of the same and they would also sell organic manure made from the De-Oiled Cake and husk of Neem. This clearly goes on to establish that the said goods to be supplied by the applicant does not fulfill the conditions mentioned under HSN code 1209 and 1211 neither in the 'specific form' nor 'specific use', as stipulated under GST Act to be categorized as attracting tax @ 0%. 7. In view of the deliberations and discussions as above, we pass the following order :- ORDER 8. The ruling so sought by the Applicant is accordingly answered as under :- In terms of Notification No. 1/2017-State Tax (Rate) No. F-10-43/2017/CT/V(69), Naya Raipur, Dated 28-
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