ISSUE:
Whether GST rate of fly ask bricks is 5 % or 18 % as it is creating a confusion on reading of the Advance Rulling No. GUJ/GAAR/R/20/2020 Dated 02.07.2020 issued in case of Dipak Kumar Ramjibhai Patel.
The conclusion of that Advance Ruling was “The product ‘Fly Ash Bricks’ manufactured and supplied by Dipakkumar Ramjibhai Patel (M/s. Mahalaxmi Cement products) are classifiable under Tariff item No.68159910 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Applicability of GST rate on the said product would be 12% GST (6% SGST + 6% CGST) upto 14.11.2017 and 18% GST (9% SGST + 9% CGST) with effect from 15.11.2017 as per Notification No: 01/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) issued under the CGST Act, 2017“ means GST rate of fly ash bricks is 18% after date 15.11.2017, but we need to be more clarity based on the following discussions:
RELEVANT NOTIFICATIONS:
| Sl. | Notification No. & Dt. | Entry No. | HSN | HSN Particulars | GST Rate |
| 1 | 01/2017-Central Tax (Rate) Dated 28.06.2017 | Schedule II Sl.No. 177 | 6815 | Fly Ash Bricks and Fly Ash Blocks. | 6.00% |
| 2 | 41/2017-Central Tax (Rate) Dated 14.11.2017 | Schedule I Sl.No. 225A | 6815 | Fly ash bricks or fly ash aggregate with 90 percent or more fly ash content” ; | 2.50% |
| 3 | 24/2018-Central Tax (Rate) Dated 31.12.2018 | Schedule I Sl.No. 225B | 6815 | Fly ash bricks or fly ash aggregate with 90 per cent or more fly a.sh content; Fly ash blocks”; | 2.50% |
REASON OF CONFUSION:
Fly Ash Bricks GST rate was 12% (6% CGST + 6% SGST) vide notification 01/2017-Central Tax (Rate) Dated 28.06.2017 up to 15.11.2017 is fine in all aspects and there has no confusion.
But after amendment of the above notification vide new 41/2017-Central Tax (Rate) Dated 14.11.2017, “Fly Ash Bricks” Inserted in sl. no. 225A of Schedule-I (GST rate 5%) along with “fly ash aggregate with 90 percent or more fly ash content” under HSN 6815. The two product were joined with word “OR”. So The Authority noted the line in this way that the “Fly Ash Bricks” is with 90% or more fly ash content & “Fly Ash aggregate” is also with 90% or more fly ash con-tent, which attracts GST rate 5%. But as per the industry practice and experience, Fly Ash Bricks never ever exceed the fly ash contains maximum to 70%. So, the reading of Fly Ash Bricks above 90% ash contains does not cover under sl. no. 225A of notification no. 41/2017 & sl. no. 225B of 24/2018-Central Tax (Rate) Dated 31.12.2018. As the Fly Ash Bricks does not exceed Ash contains 90%, so the Authority stated that Since the ‘Fly Ash Bricks’ manufactured does not find any schedule for Fly Ash Bricks containing ash up to 60% So, the same will cover under sl.no. 453 of the notification 01/2017-Central Tax (Rate) Dated 28.06.2017 means any Chapter Goods which are not specified in Schedule I, II, IV, V or VI will attract GST rate 18%.
ANALYSIS FOR 5%:
In a wide view of the 23rd GST Council Meeting held on date 10th November 2017, it understood that the GST rate of Fly Ash Bricks is 5% based on the following lines collected from the council meeting papers:
A) AGENDA :
Sl.No. 40 of the annexure-II (A) in page no. 135 shows the Rationalization of GST rates on goods [based on recommendations of the Sub-Group of Fitment Committee]:
| Sl. No. | HSN | Description | Present GST Rate | GST Rate Recommended | Justification |
| 40 | 6815 | Fly ash bricks | 12.00% | 5.00% | a) GST rate on Fly ash bricks was discussed in detail in the 21st GST Council meeting.
b) Clay bricks attract 5% tax. Fly-ash is a pollutant. c) Clay bricks are made out of top fertile soil. As against that the fly ash bricks, use fly ash a pollutant. |
B) MINUTES OF MEET-ING:
i) Based on the meeting discussion on Annexure II: Rationalization of GST rates on goods (based on recommendations of the Sub-Group of Fitment Committee) mentioned in page no. 19 in minutes book sl. no.19.02. :
| Sl. | Recommendations |
| 19.2 | The Honorable Minister from Odisha stated that at Sr. No.40 of Annexure II of the Agenda Notes to agenda item 6(i), the rate of tax on fly ash bricks was rightly proposed to be reduced from 12% to 5%. He suggested that fly ash aggregates, which were chip like products and consumed almost 90% of fly ash, should also be covered in this entry and should be charged to tax at the rate of 5%. Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha, suggested that fly ash aggregates should be classified under Chapter Heading 68 15. The Secretary suggested that rate of tax on fly ash aggregate with 90% or more fly ash content, falling under Chapter Heading 6815 may be reduced to 5%. The Council agreed to the suggestion. |
ii) ln respect to the agenda item 6(i), the Council took the following decisions in minutes book sl. no.24 in page no. 24:
| Sl. | Council Decisions |
| (ii) | Approve the rate of tax recommended by the Fitment Committee for goods listed in Annexure II; |
| (v) | To reduce the rate of tax on fly ash aggregate with 90% or more fly ash content, falling under Chapter Heading 6815, from 18% to 5%. |
C) DECI-SION:
Sl.No. (D) (44) in page no. 18 shows the recommendations for changes in GST/IGST rate and clarifications in respect of GST rate on certain goods [As per discussions in the 23rd GST Council Meeting held on 10th November, 2017] :
| Sl. | HSN | Description | Present GST Rate | GST Rate Recommended |
| 44 | 6815 | (a) Fly ash bricks
(b) Fly ash aggregate with 90% or more fly ash content. |
12.00%
18.00% |
5.00%
5.00% |
Considering all above factors of 23rd GST Council Meeting papers like Agenda, Minutes of Meetings, Decision, it clearly shows that the proposal of Honorable Minister from Odisha was duly incorporated in the Agenda paper of 23 GST Council Meeting towards reduction of Fly Ash Bricks GST rate from 12% to 5% and accordingly it was duly noted in meetings Minutes Books and approved by the council. It was also clearly mentioned in the meeting decision paper that GST rate will be reduced from 12% to 5%.
According to the conclusion of 23rd GST Council Meeting, notification no. 41/2017-Central Tax (Rate) Dated 14.11.2017 was released by the appropriate authority showing clear intention that “Fly ash bricks or fly ash aggregate with 90 per-cent or more fly ash content” attracts GST rate 5%. Mean there are two products covered in this notification under HSN 6815 and the word “OR” is just joining to the following separate products:
| 1ST | 6815 | Fly Ash Bricks (As will will never ever crossed 90%) | 5.00% |
| 2ND | 6815 | Fly Ash Aggregate with 90 percent or more fly ash con-tent | 5.00% |
Further another 24/2018-Central Tax (Rate) Dated 31.12.2018 was released to add the 3rd product in this HSN 6815 named ” Fly ash blocks” and it also covered under the same GST rate 5%.
CONCLUSION
Considering all above discussions and read together, it conclude that the intention of the Government was rightly proposed in Agenda to reduce the GST rate of HSN code 6815 99 10 from 12% to 5 % and it was duly approved by the Authority in minutes books of 23rd GST Council meeting & decision taken accordingly. Based on this decision, notification published in the portal dated 14.11.2017. So reading of “with 90 percent or more fly ash content” for both the “Fly Ash Bricks” and “Fly Ash Aggregate” is not sustainable and before “OR” is for independent product “Fly Ash Bricks” attract GST rate 5 % and after “OR” is for independent product “Fly Ash Aggregate with 90 percent or more fly ash content” attract GST rate 5 % under HSN code 9815 99 10.
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DISCLAIMER v: All above opinions and analysis is exclusively of the author based on the facts and documents available in GST portal and it may vary from the opinion of other authors and individuals.
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