In re George Maijo Industries Private Limited (GST AAR Tamilnadu)
Q1. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, Sl.No.252 of GST Act dated 28.06.2017, being this engine forms a part of fishing vessel of HS code 8902.
Applicability of GST Rate 5% on marine engines pertaining to HS code 8407 forming part of fishing vessels is not answered for lack of substantiating documents.
Q2. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, Sl.No.252 of GST Act dated 28.06.2017, being this engine forms a part of boats of HS code 8906 being supplied to defence department and other agencies used for patrolling/flood relief and rescue purposes.
Applicability of GST rate 5% on marine engines pertaining to HS code without considering its general tax rate as per the entry of Schedule I, SI. No.252 of GST Act dated 28.06.2017, being this engine forms a part of boats of HS code 8906 being supplied to defence department and Naval base, Cochin is available to the applicant when such engines are fit in vessels used for patrolling/flood relief and rescue purposes. Applicability of GST rate at 5% under SI.no.252 cited above is not available for spare parts of marine engines.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, TAMILNADU
Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
GEORGE MAIJO INDUSTRIES PRIVATE LIMITED, 2B, Apex Plaza, 3rd floor, 5, Nungambakkam High Road, Chennai-34 (hereinafter called the Applicant) are registered under GST with GSTIN 33AACCG6145R1Z8. The applicant has sought Advance Ruling on the following questions:-
1. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, being this engine forms a part of fishing vessel of HS code 8902.
2. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, being this engine forms a part of boats of HS code 8906 being supplied to defence department and other agencies used for patrolling/flood relief and rescue purposes.
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017.
2.1 The applicant has stated that they are importing outboard motors from Japan and selling the outboard motors to Fishermen, Boat builders, Defence Department and other agencies to fit in boats used for fishing purpose, patrolling, flood relief and rescue operations. They are also providing repairs and maintenance service for outboard motors, selling spare parts of marine engines, importing fishing hooks, agricultural equipment and motor cycle transmission chain sprocket and selling the same all over markets in India.
2.2 The applicant has stated that the outboard motors are designed to operate only in marine and fresh water and it can be operated only by fitting in boat. The cooling system of the outboard motor is designed to take water through the propellers and hence the engine cannot be operated out of water. (Water cooled engine not air cooled). They have stated that the outboard motor cannot be utilized unless otherwise fitted on the boat, even for doing service they need to put in to a water tank to attend to the repairs and maintenance.
2.3 On interpretation of law, the applicant has referred to clarification provided vide para 10.1 of Circular No.52/26/2018-GST dated 09.08.2018, wherein it clarifies that the marine engine attracts 5% GST, being part of fishing vessels. The applicant has also relied upon the Advance Ruling issued by the Kerala Authority for Advance Ruling in the case of South Indian Federation of Fisherman Societies, wherein it has been ruled that rate of GST is 5% for outboard motors being a part of boats used for fishing and patrolling/flood relief and rescues purposes.
3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media. The applicant consented and the hearing was held on 05.10.2021. The Authorised Representative Shri. A. Mohanraj, Business Head of the Applicant appeared for the hearing and reiterated their submissions. He submitted that they are importing from Japan and they consider Motor as part of Marine Engine and hence, have applied for ruling under HSN 8407. They were asked to furnish the following documents both for receipt and supply:-
i. Bills of entries, invoices, purchase orders for the products imported
ii. Tax invoices issued by the applicant
3.2 The applicant vide their letter dated 11.10.2021 (received on 25.10.2021) submitted the following documents:-
> Purchase order no. CHPO/0003/2122 dated 23.04.2021 raised on M/s YAMAHA MOTOR CO.LTD
> Purchase order no. CHPO/0014/2122 dated 09.06.2021 raised on M/s YAMAHA MOTOR CO.LTD
> Invoice No. M07241Y2 dated 27.05.2021 of M/s YAMAHA MOTOR CO.LTD
> Invoice No. M17733Y2 dated 07.08.2021 of M/s YAMAHA MOTOR CO.LTD
> Bills of entry for the above said invoices.
> Tax invoice No. PONOBG/OO 182/2122 dated 30.04.2021 for supplying E9.9 DMHL 2 Stroke Yamaha Petrol OBM E9.9 DMHL (HSN 84012100) to Shri. P.V. Sebastain Ponnaiya
> Tax invoice no.NAOBG/0251/2122 dated 30.09.2021 for supplying E9.9 DMHL 2 Stroke Yamaha Petrol OBM E9.9 DMHL (HSN 89020090) to Shri. Franklin Rajesh
3.3 On perusal of the documents furnished by the applicant it was seen that there were no purchase orders for supplies made to P.V Sebastain Ponnaiya and Franklin Rajesh and registry called for the same from the applicant. The applicant vide their email dated 03.11.2021 informed that most of their sales happened through walk in customers and the above said persons are fishermen and the applicant has not received any purchase order from them. They furnished copies of purchase orders and invoices for Government supplies done by them.
4. The Centre Jurisdictional authority who has administrative control over the applicant has furnished comments on the Advance Ruling application and has stated that there are no pending proceedings on the issue raised by the applicant. The center jurisdictional authority has stated that these Out Board motors/ Marine engines are also used for vessels for pleasure or sport falling under Chapter Heading 8903 in which case the goods are not eligible for benefit of the above mentioned Notification and they are chargeable at the rate of 28% GST. It has also been stated that some of the engines imported are used for this purpose also and while extending the benefit of the notification cited supra, necessary safeguards shall be taken.
5. The State Jurisdictional authority has stated that there are no pending proceedings in the applicant’s case.
6. We have carefully examined the submissions of the applicant in their application and during the Hearing. The applicant is engaged in importing outboard motors from Japan and selling them to Fishermen, Boat builders, Defence Department and other agencies to fit in boats used for fishing purpose, patrolling, flood relief and rescue operations. They are also providing repairs and maintenance service for outboard motors, selling spare parts of marine engines, importing fishing hooks, agricultural equipment and motor cycle transmission chain sprocket and selling the same all over markets in India. The applicant has sought Advance Ruling on the following questions:-
1. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, being this engine forms a part of fishing vessel of HS code 8902.
2. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, being this engine forms a part of boats of HS code 8906 being supplied to defence department and other agencies used for patrolling/flood relief and rescue purposes.
The question on which ruling is sought is about the applicability of GST rate as per the entry of schedule I, Sl.no.252 of Notification No. 01/2017 dt. 28.06.2017. Hence the application is found admissible under Section97 (2)(b) of the CGST Act,2017.
7.1 Applicant has submitted that they sell the outboard motors imported from Japan to fishermen and has sought if the general tax rate of 5% for marine engines as specified in the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, this engine forming a part of fishing vessel of HS code 8902 is applicable to the goods so cleared. In respect of the boats sold to defence department and other agencies wherein such boats are used for patrolling/ flood relief and rescue purposes, they have sought ruling if the general tax rate of 5% is applicable as these engines form part of boats of HS code 8906 as provided therein. They have also stated that Para 10.1 of Circular no. 52/26/2018-GST dt.09.08.2018 clarifies that the marine engine attracts 5% GST being part of fishing vessels. It is observed that the Applicant has come for ruling on Marine engines and its spare parts as found from their submissions. Thus the ruling has been sought for two scenarios, one being supply of outboard motors used in fishing vessels and the other being used in boats supplied for patrolling/rescue operation of the defence department.
7.2 The clarification sought is whether the rate prescribed under Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T (Rate) dated 28.06.2017 as amended is applicable to the Applicant. The said entry is as below:
