Sprinkler and Drip irrigation system is classifiable under Heading No. 8424 and taxable at 12%: AAR
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- Last Updated on 28 February, 2022
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Case Details: Kriti Industries (India) Ltd., In Re - [2021] 129 Taxmann.Com 425 (AAR - Madhya Pradesh)
Judiciary and Counsel Details
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- Manoj Kumar Choubey and Virendra Kumar Jain, Member
- Ashutosh Upadhyay, Adv. for the Applicant.
Facts of the Case
The applicant is involved in the supply of sprinkler system, drip irrigation system including laterals, PVC pipes and other components and accessories as per the Guidelines of Per Drop More Crop (Micro Irrigation) Component of PMKSY issued by Government of India. The applicant submitted the application before the Madhya Pradesh AAR to determine whether such products are classified under HSN 8424 and applicable tax rate is 12% as per Notification No. l/2017-Central Tax (Rate), dated 28-06-2017.
The AAR observed that Entry No. 195B of the Schedule II to the Notification No. 0l/20I7- Central Tax (Rate), dated 28-6-2017 covers the goods with the description ‘Sprinklers, drip irrigation system including laterals; mechanical sprayers’.
The Department was of the view that the above entry does not cover PVC pipes, other components and accessories of sprinkler/drip irrigation system. The department also contended that if individual parts of the Sprinkler Irrigation System/drip irrigation system are supplied separately, then it will not be covered under the above entry.
The AAR observed that the CBIC has clarified vide Circular No. 81/55/2018-GST, dated Dec 31, 2018 that ‘sprinklers’ in the said entry no. 195B covers sprinkler irrigation system and accordingly sprinkler system consisting of nozzles, lateral and other components would attract 12% GST rate. Further, Circular No. 155/11/2021-GST, dated June 17, 2021 clarified that the laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which are classifiable under heading 8424, would attract GST at the rate of 12%, even if supplied separately.
AAR Held
In view of the above, the Madhya Pradesh AAR held that the sprinklers; drip irrigation system including laterals, PVC Pipes and other component and accessories are classifiable under chapter heading/tariff item No. 8424 and under entry No. 195B of Schedule II of Notification No. 01/2017 Central Tax (Rate), dated 28-6-2017 and would attract GST at the rate of 12% (6% CGST and 6% SGST). Further, laterals/parts used solely or principally with sprinklers or drip irrigation system would be classifiable under heading 8424 and would attract a GST of l2% (6% CGST and 6% SGST), even if supplied separately.
However, any part of general use, which gets classified in a heading other than 8424, in terms of section Note and Chapter Notes to HSN, would attract GST as applicable to the respective heading.
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A heavy information, but thank for the update. Just wanted to know that how can the implementation of drip irrigation systems benefit farmers and promote sustainable agriculture practices?