In re Kunthunath Trading & Investments Pvt Ltd (GST AAR Maharashtra)
Maharashtra Authority for Advance Ruling (AAR) addressed the GST classification of “fish finders” in the case of Kunthunath Trading & Investments Pvt Ltd. The applicant, a trader of fish finders, sought clarification on whether these devices qualify as “parts of goods” under specific HSN codes related to vessels (8901-8907), which would attract a reduced GST rate of 5% as per Notification No. 1/2017-Central Tax (Rate). The core issue was whether fish finders, used to locate fish underwater, could be considered integral parts of vessels like fishing boats, cargo ships, or other floating structures.
The AAR examined the definition of “parts” as it is not explicitly defined in GST law, referring to dictionaries and judicial precedents. The AAR noted that a “part” is generally understood as an integral component essential for the functioning of a whole. Judicial precedents, such as the Supreme Court’s ruling in Saraswati Sugar Mills Vs Commissioner of Central Excise, emphasize that a component part is necessary for the constitution of the whole and without it, the article will not be complete. The AAR also noted the explanatory notes to Section XVII, which clarifies that chapter 89 doesn’t provide for parts (other than hulls) or accessories, indicating such items are classified in other chapters.
The AAR determined that fish finders, while used on fishing vessels, are not essential for the vessel’s basic function. They are considered additional equipment, similar to walkie-talkies or life jackets, which are necessary for safety but not integral to the vessel’s operation. The ruling in State of Uttar Pradesh vs M/S. Kores (India) Ltd was cited, which highlighted that an item is a “part” only if the vessel cannot function without it. Fish finders, while aiding in fishing activities, do not meet this criterion. The AAR also referred to a prior ruling by the Maharashtra Appellate Authority for Advance Ruling in the case of Ms. A. S. Moloobhoy Pvt. Ltd., which similarly concluded that fish finders are not integral to the function of a ship and are therefore not considered parts of vessels under the specified HSN codes.
The AAR rejected the applicant’s reliance on guidelines from the Department of Animal Husbandry, Dairying & Fisheries, which mentioned fish finders in safety kits. The AAR clarified that these guidelines do not mandate fish finders as essential parts but rather as optional equipment. The AAR concluded that fish finders do not qualify as “parts of goods” under HSN codes 8901-8907 and therefore do not fall under the 5% GST rate specified in the notification. This ruling clarifies the GST classification of fish finders, impacting trading companies involved in their sale and distribution.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
