prpri 5% GST Payable on Patanjali ‘Gomaya Samidha’ 5% GST Payable on Patanjali ‘Gomaya Samidha’

Case Law Details

Case Name : In re Patanjali Ayurved Ltd. (GST AAR Uttarakhand)
Appeal Number : Advance Ruling 01/2021-22
Date of Judgement/Order : 31/05/2021
Related Assessment Year :

In re Patanjali Ayurved Ltd. (GST AAR Uttarakhand)

1. Gomaya Samidha – Patanjali Ayurved ka Utpad is a brand name of M/s Patanjali Ayurved Ltd. and it is an organic manure covered under Chapter Heading no. 3101.

2. Gomaya Samidha – Patanjali Ayurved ka Utpad is not exempt from levy of GST in terms of S.No. 108 of Notification No.2/2017 – Central Tax (Rate) dated 28th June, 2017. Further this product is also not covered under S.No. 113 of Notification No. 2/2017 – Central Tax (Rate) dated 28th June, 2017 and hence not exempt under this entry also.

3. Gomaya Samidha – Patanjali Ayurved ka Utpad is leviable to GST @5% in terms of S. No. 182 of Schedule 1 to Notification No. 1/2017 – Central Tax (Rate) dated 28th June, 2017 as the same is covered under this entry.

4. Gomaya Samidha – Patanjali Ayurved ka Utpad is not leviable to GST @5% in terms of S. No. 263 A of Schedule I to Notification No. 1/2017 – Central Tax (Rate) dated 28th June, 2017as the same is not covered under this entry.

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,UTTARAKHAND

1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s Patanjali Ayurved Ltd.. D-38, Industrial Area, Haridwar, Uttarakhand (here in after referred to as the applicant ) is registered with the GSTN having Registration No. 05AAECP4424CIZX and seeking advance ruling on the following question:

Question No.1: As per the facts and circumstances as explained in Annexure-I supra, what is the correct classification (HSN Code) for Subject Goods i.e. ‘Gomaya Samidha’?

Question No.2: As per the facts and circumstances as explained in Annexure-I supra, whether the Subject Goods i.e. ‘Gomaya Samidha’ is exempt from levy of GST in terms of S. No. 108 of Notification No.2/2017 – Central Tax Rate dated 28th June, 2017 or in the alternative in terms of S.No. 113 of Notification No.2/2017 – Central Tax Rate dated 28th June, 2017?

Question No.3: If the answer to Question No. 2 supra is in the negative, whether the Subject Goods i.e. ‘Gomaya Samidha’ is leviable to GST @5% in terms of S. No. 182 of Schedule I to Notification No. 1/2017 – Central Tax (Rate) dated 28th June, 2017?

Question No.4: If the answer to both Question No. 2 and 3 supra is in the negative, whether the Subject Goods i.e. ‘Gomaya Samidha’ is leviable GST @5% in terms of S. No. 263A of Schedule 1 toNotification No. 1/2017 – Central Tax (Rate) dated 28th June, 2017?

2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

3. As per the said subsection (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of:-

(a) Classification of any goods or services or both

(b) Applicability of a notification issued under the provisions of this Act,

(c) Determination of time and value of supply of goods or services or both,

(d) Admissibility of input tax credit of tax paid or deemed to have been paid

(e) Determination of the liability to pay tax on any goods or services or both

(f) Whether the applicant is required to be registered

(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term

4. Since applicant has sought advance ruling on applicability of notifications & determination of tax liability, therefore, in terms of said Section 97(2)(b) & (e) of the Act, the application filed by the applicant has been admitted.

5. On perusal of records submitted by the applicant, we find that the applicant is registered in Uttarakhand having GSTIN bearing no. 05AAECP4424CIZX. On going through the statement of relevant facts put forth by the applicant in Annexure-I they have submitted that:

a) The Applicant undertakes various R&D activities for the creation of new products or increasing the efficiency of existing ones and is thus able to introduce new products in the market from time to time. That one such new product which is now developed and introduced by the Applicant in the market is ‘Gomaya Samidha’ (‘Subject Goods) which is recently developed by the Applicant to be used in the process of performing hawan i.e. ‘Yajna’. The relevant ingredients used in the manufacture of the Subject Goods are as follows:

95% cowdung; and 5% herbs

(Copy of front back images of the packing of the Subject Goods along with the lab test report certifying the ingredients has also been enclosed by the applicant)

b) That from the said label, ingredients and the lab test report it can be seen that the Subject Goods is nothing but ‘cowdung’ which is marketed to be used in the process of performing Yajna. The usage of the Subject Goods in performing Yajna shall purify the surrounding air by reducing bacteria as cowdung is considered to be anti-bacterial.

c) As per S. No. 108 of the Exemption Notification No.2/2017-Central Tax dated 28th June, 2017 all goods and organic manure falling under HSN chapter heading 3101 are exempt from levy of GST. The relevant text of the said provisions is reproduced below.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No.2/2017 – Central Tax Rate F.No.354/117/2017-TRU
Dated 28th June, 2017

In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts intra-State supplies of goods, the description of which is specified in column (3) of the Schedule appended to this notification, falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedule, from the whole of the central tax leviable thereon under section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017).

SCHEDULE

S.No. Chapter Heading/ Subheading/ Tariff item Description of Goods
(1) (2) (3)
108 3101 All goods and organic manure other than those put up in unit container and, –

(a) bearing a registered brand name; or

(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available (other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily, subject to the conditions as in the ANNEXURE I).

………………………..

Explanation.- For the purposes of this Schedule,-

(i) The phrase “unit container” means a package, whether large or small (for example, tin, can, box, jar, bottle, bag, or carton, drum, barrel, or canister) designed to hold a predetermined quantity or number, which is indicated on such package.

(ii) (a) The phrase “brand name” means brand name or trade name, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

(b) The phrase “registered brand name” means,-

(A) a brand registered as on the 15th May 2017 under the Trade Marks Act, 1999 irrespective of whether or not the brand is subsequently deregistered;

(B) a brand registered as on the 15th May2017 under the Copyright Act, 1957(14 of 1957);

(C) a brand registered as on the 15th May2017 under any law for the time being in force in any other country.”;

(iii) “Tariff item”, “sub-heading” “heading” and “Chapter” shall mean respectively a tariff item, heading, sub-heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).

(iv) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification.

2. This notification shall come into force with effect from the 1st day of July, 2017.

d) Applicant submits that from the images of the packet enclosed with this application in which subject goods are packed it can be seen that the name “Gomaya Samidha” mentioned in “Hindi” on the packaging is not registered under the Trademarks Act, 1999 (“TM Act”) or under any previous laws relating to trademarks and thus the same cannot be considered to be a registered brand name as provided under explanation (ii)(b) of the Exemption Notification. Further, in case of a registered brand name under the TM Act the name is generally suffixed with the letter “R” so as to communicate to the public at large that the said name or mark is registered and protected under the TM Act and copying or using the said name or mark without permission would amount to violation of the provisions of the TM Act and the same is also punishable. As there is no such registration in the present case, there is no dispute that the said name is not a registered brand name as on date of filing of this application and the Applicant also declares and confirms this fact that there is no registration under the TM Act on the name “Gomaya Samidha” in the name of the Applicant.

e) Moving to the meaning of the term brand name’ as defined in explanation (ii)(a) of the Exemption Notification, the said definition provides that “brand name” means a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used for the purpose of indicating a connection in the course of trade between the goods and some person using such name or mark. From the label and packing of the Subject Goods it can be seen that the name “Gomaya Samidha” does not indicate any connection in the course of trade between the said goods and the Applicant. The name “Gomaya Samidha” is a literal mix of two words “Gomaya” i.e. relating to Cow and “Samidha” which implies solution. Thus, the said words merely imply that Subject Goods are in relation to Cow and nothing more. Thus, by no stretch of imagination it can be said that the said name indicates a connection in the course of trade between the goods and the Applicant and the connection, if any which the said goods indicate is w.r.t. the usage of the product.

The applicant placed reliance on the decisions in the following cases.-

i). Tarai Food Ltd Vs Commissioner of Central Excise. Meerut-If reported as 2006 (198) KLT. 323 (S.C.)

ii) Commissioner of Central Excise, Puducherry Vs CESTAT, Chennai reported as 2015 (318) EL.T. 238 (Mad.)

iii) Commissioner of Central Excise, Kolkata-I Vs Synotex Industries reported as 2012 (278) EL. T. 90 (Tri. – Kolkata)

f) Thus, the name “Gomaya Samidha” is not a brand name or trade name so as to make the Subject Goods as branded. Further, the mere mentioning of the name of the manufacturer i.e. the Applicant on the packaging shall also not make the said goods as branded goods for the purpose of explanation (ii)(b) of the Exemption Notification. In this regard, reliance is also placed on the decision of the Hon’ble Supreme Court in the matter of Astra Pharmaceuticals (P) Ltd. Vs Collector of C. Ex, Chandigarh reported as 1995 (75) EL.T. 214 (S.C.) wherein it was held as follows in the context of house mark’ and product mark’:

6. the injections manufactured by the appellant are specified in a Pharmacopoeia ……………… Therefore, it would attract levy only if its container or packing carried any distinctive marks so as to establish the relation between the medicine and the manufacturer. But the identification of a medicine should not be equated with the produce mark. Identification is compulsory under the Drug Rules. Technically, it is known as “house mark’.

In Narayan’s Book on Trade Marks and Passing-Off, the distinction between house mark’ and ‘product mark’ (brand name) is brought out thus, “677A. House mark and product mark (or brand name) In the pharmaceutical business a distinction is made between a house mark and a product mark. The former is used on all the products of the manufacturer. It is usually a device in the form of an emblem, word or both. For each product a separate mark known as a product mark or a brand name is used which is invariably a word or a combination of a word and letter or numeral by which the product is identified and asked for. In respect of all products both the product mark and house mark will appear side by side on all the labels, cartons etc. Goods are ordered only by the product mark or brand name. The house mark serves as an emblem of the manufacturer projecting the image of the manufacturer generally.”

The ‘AP’ or ‘Astra’ on the container or packing was used to project the image of manufacturer generally. It did not establish any relationship between the mark and the medicine. For instance, if the appellant instead of using Dextrose injections would have described it as Astra injections or Astra Dextrose injections then it could be said that a relationship between the monograph and the medicine was established.

In the case of appellant it was only a monograph to identify the manufacturer.”

g) Reliance is also placed on the Circular (s) issued by the than CBEC wherein it was clarified in relation to mentioning of manufacturer’s name on the packaging. Circular No. 1031/ 19/2016-CX, dated 14th June 2016 was issued as regards the levy of Excise duty on readymade garments and made up articles of textiles bearing brand name or sold under a brand name having retail sale price of Rs. 1,000 or more. Therein the Board clarified that ‘merely because the outlets (shop) of a retailer, from where readymade garments or made ups are sold, has a name, say, M/s. XYZ and Sons, the readymade garments or made ups sold from such outlet (shop) cannot be held as branded readymade garments or made ups and become liable to excise duty. Similarly, in Circular No. 947/8/2011-CX, dated 21s1 June, 2011 which was issued as regards levy of Excise duty on branded readymade garments it was clarified therein that the mere mention of the name of t ie tailor or manufacturer would not render the product as branded product.

h) Applicant submits that from the ratio of the above decisions as well as the Circular (s) issued by the CBEC under the excise laws which was a statute in pari-materia it can be seen that mere mentioning of the name of the manufacturer and/or packer, on the packaging would not render the product as branded. Further, if mere mentioning of the name of the manufacturer on the packaging is considered as branding than there would be no product which would fall in the definition of unbranded goods and thus the said interpretation would render the Exemption Notifications redundant to the extent it provides exemption to unbranded goods.

i) It is settled law that Courts should always presume that the legislature inserted every part in a statute/notification for a purpose and the legislature’s intention is that every part of a statute should have effect and that a construction which results in redundancy of some part of a statute, must not be accepted. Reliance in this regard is placed on the following decisions:-

1. Bansal Wire Industries Ltd. Vs State ofU.P. reported as [2011 (269) E.L.T. 145 (S.C.)]

2. Bharat Cottaga Industries Vs Union of India reported as [1992 (59) E.L.T. 30 (Bom.)]

j) From the ratio of the above decisions, it can be seen that mere mentioning of the name/mark of the manufacturer on the packaging would not amount to using of brand name in the course of business. The mentioning of the name of the manufacturer on the packaging would also not make the goods as branded goods. Thus, the subject Goods supplied by the Applicant satisfies the test of being unregistered and the same should accordingly be exempt from levy of GST by virtue of the Exemption Notification.

k) The Applicant submits that once it is confirmed that Subject Goods are unbranded the only further question that remains to be answered is that whether the said goods are covered under HSN 3101 i.e. S.No. 108 of the Exemption Notification or not. It is submitted that as per Explanation (iii) and (iv) appended to the Exemption Notification it is clear that the rules of interpretation (‘Gl Rules’) as applicable to the interpretation of the Customs Tariff Act (CTA) shall apply to the interpretation of HSN classification under GST as well. Thus, GST law has borrowed classification from CTA. Applying the said classification to the present case it can be seen that Subject Goods is nothing but ‘cowdung’ with a small quantity of herbs. As per Chapter heading/Sub-heading/Tariff item mentioned against HSN 31010091 in the CTA It can be seen that tariff item 31010091 contains four dashes (—). As per the rules of interpretation to the CTA whenever a tariff item contains four dashes (–) the same is understood to be a subcategory of the immediately preceding heading or sub- heading containing single (-) or double dash (–). As per CTA, tariff item 31010091 (Animal Dung) is preceded by a single dash (-) heading i.e. Animal or Vegetable Fertilizer, whether or not mixed together or chemically treated (HSN 310100).

I) On a combined reading of the above, it can be concluded that HSN 31010091 (Animal Dung) contains all types of animal dungs which shall also include ‘cowdung’ as there is no separate tariff item or heading for ‘cowdung. Thus, all types of animal dung are included in HSN 31010091 itself. Therefore, in terms of the explanatory rules of interpretation to CTA, the Subject Goods shall fall under HSN 31010091 only and taxable @0% being unbranded goods. Further, in the present case the Exemption Notification has defined HSN at 4 digit level i.e. 3101 and uses the description as ‘all goods which itself shows that the intention is to treat all goods falling under chapter heading 3101 irrespective of the classification at 8 digit level i.e. tariff item @0% only.

m) It is submitted that it also equally settled that the end usage of any product shall not be a determinative factor in order to define the classification of goods. In this regard, reliance is Placed on the decision of the Hon’ble Supreme Court in Dunlop India Ltd. Vs union of India A Ors. reported as 1983 (13) E.L.T. 1566 (S.C.) wherein it was inter-alia held that end use is irrelevant for determining classification of goods under tariff schedule unless expressly mentioned in the schedule or definition itself.

n) In the absence of any specific end usage related restriction in the Exemption Notification the Subject Goods merit classification under HSN 3101 being cowdung irrespective of the usage of the product by the consumer.

o) Without prejudice to the above, even if the Subject Goods are held not to be covered under HSN 3101 as mentioned supra, the same shall still be taxable at the rate of 0% under S. No. 113 of the Exemption Notification No,2/2017 – Central Tax Rate dated 28.06.2017 being in the nature of “firewood or fuel wood” covered under Chapter Heading 4401 used in the performance of Yajna’. Applicant submits that the term ‘firewood’ or “fuel wood” is not defined under the CGST Act or any notification or circular issued thereunder. However, the term “wood” is defined under Note No. 6 appended to Chapter 44 of the CTA wherein it is provided that the term “wood” includes all materials of woody nature. The relevant extract of the said Note is as follows.

NOTES:

……………………….

6. Subject to Note 1 above and except where the context otherwise requires, any reference to “wood” in a heading of this Chapter applies also to bamboos and other materials of a woody nature.

p) As per Rule 1 of the GI Rules the basic principle is that classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Applying the definition of “wood” provided in Note 6 to Chapter 44, it is clear that technically “wood” not only includes wood but also any other material which has a woody nature. Thus, by virtue of the said definition any material which can be used as a substitute for burning wood can be said to be covered under the meaning of the term ‘firewood’ or ‘fuel wood’ as provided under HSN 4401. Thus, even from this angle Subject Goods should be taxable to GST at NIL rate as covered under HSN 4401. In this regard, reliance is placed on the decisions in case of Commissioner of Central Excise Delhi-Ill Vs M/s UNI Products India Ltd reported as 2020-T10L-91-SC-CX

q) Applicant submits that the ratio of the decision of the Hon’ble Supreme Court in UNI Products supra is squarely applicable to facts of the present case. As per the said decision, if the Chapter Note have defined or included or excluded any product from any entry the same has to be followed and the classification should be done in accordance with the Chapter Note and there is no requirement of importing any other rule of classification such as common parlance etc. Applying the same to the present situation, once Note 6 to Chapter 44 defines wood to include any other material of woody nature, the same should prevail of any other rule of interpretation and the Subject Goods being in the nature of substitute for wood in performing the ‘Yajna’ shall be covered under HSN 4401 and taxable to GST at NIL rate.

r. It is submitted that even as per Rule 3(a) of the GI Rules the heading which gives the most specific description shall he preferred over a heading which gives a general description. In this regard, reliance is placed on the decision of the Hon’ble Supreme court in a Nagaraju Bros. Vs State of AP reported as 1994 95 STC 1 wherein it was held that though bag is a plastic item in common parlance, but if there is a specific entry for suitcases that entry will prevail over general entry. Thus, MSN 3101 can he said to be a general entry for all types of animal dung whereas HSN 4401 is specific to fire wood and the Subject Goods shall accordingly merit classification under HSN 4401.

s) Lastly, even looking at the entire matter from the angle of scientific or technical meaning test the Subject Goods being technically defined under the Notes to Chapter should be understood in the technical sense only. In this regard, reliance is placed on the decision of the Hon’ble Supreme Court in Parle Agro (P) Ltd Vs Commr. of Commercial Taxes. Trivandrum reported as 2017 (352) E.L.T. 113 (S.C.). Relevant extract of the said decision is reproduced as below:-

37 ……………………………..

“53. It is apparent from all these reports that the calcareous stone of specific gravity of 2.5 is not marble technically and scientifically. The finding of the Appellate Tribunal is, therefore, not sustainable. It is, of course, well settled that in taxing statue the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the tariff entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the tariff entry and any other entry in the Tariff Schedule.”

38. In the present case, the Entry 2 under Section 6(1)(a) uses the word ‘aerated’. This is scientific term and has been repeatedly used in different statutes including the Central Excise Tariff and different HSN codes also uses the term ‘aerated’. The word ‘aerated’ is scientific and technical word used under different statutes and the scientific and technical meaning of the word ‘aerated’ can be looked into for finding out the real import of the Entry.”

t) Applicant submits that from the ratio of the above decision it can be seen that when there is any dispute or ambiguity between two entries in the tariff schedule, the courts have interpreted the tariff entry in terms of its technical or scientific meaning instead of the popular meaning. If the said test is applied to the facts of the present case from the ingredients of the Subject Goods can be seen that the said goods are nothing but “other materials of a woody nature” thereby satisfying the criteria of scientific or technical meaning of the term “firewood” or “fuel wood” which is otherwise not defined anywhere in the Exemption Notification or the Act and even as per the said test the Subject Goods merit classification under HSN 4401.

u) Without prejudice to the above, if the Subject Goods are held not to be covered under the Exemption Notification as discussed supra, the same shall be taxable at the rate of 5% under S. No.263A of Schedule 1 to Notification No. 1/2017 – Central Tax (Rate) dated 28th June, 2017 (“Goods Rate Notification”) being in the nature of ‘hawan samagri’. The relevant text of the said entry is reproduced below.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No. 1/2017-Central Tax (Rate)
New Delhi, the 28th June, 2017

G.S.R. (E).. In exercise of the powers conferred by sub-section (1) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies the rate of the central tax of- (i) 2,5 per cent, in respect of goods specified in Schedule I, (ii) 6 per cent, in respect of goods specified in Schedule II, (iii) 9 per cent, in respect of goods specified in Schedule III, (iv) 14 percent, in respect of goods specified in Schedule IV, (v) 1.5 per cent, in respect of goods specified in Schedule V, and (vi) 0.125 per cent, in respect of goods specified in Schedule VI appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on intra-State supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, subheading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules.

Schedule I – 2.5%

S.No. Chapter Heading/Sub-heading/Tariff item Description of Goods
(1) (2) (3)
263A Any chapter Rosaries, prayer beads or Hawan samagri

v) Applicant submits that it is settled law that in interpretation of entries in taxing statute the words used therein are generally understood in the sense in which they are understood in the trade and industry i.e. the common parlance or popular meaning. In this regard, reliance is placed on the following decisions.-

1. Commr. of C. Ex., New Delhi Vs Connaught Plaza Restaurant (P) Ltd. reported as 2012 (286) E.L.T. 321 (S.C.)

2. Oswal Agro Mills Ltd (supra)

3. Ramavatar Budhaiprasad Etc Vs Assistant Sales Tax Officer, Akola reported as (1962) 1 SCR 219

4. Commissioner of Sales Tax, Madhya Pradesh Vs Jaswant Singh Charan Singh reported as (1967) 2 SCR 720

5. Indian Aluminium Cables Ltd. Vs Union of India & Ors reported as 1985 (21) E.L.T. 3 (S.C.)

6. Collector of Central Excise, Kanpur Vs Krishna Carbon Paper Co. reported as 1988 (37) E.L.T. 480 (S.C.)

w) Applicant submits that from the ratio of the above cases it can be seen that courts have consistently applied the popular or common meaning test in order to determine the true classification of any goods. Applying the said test to the facts of the present case the term ‘hawan samagri’ is not defined under the CGST Act or any notification or circular issued thereunder. Thus, in popular or common parlance ‘hawan samagri’ is understood to mean a mixture of goods mainly ‘cowdung’ which is offered in the ‘Yajna’ and which disseminates in micro form in the air to purify the environment besides activating the air as disinfectant germicidal agent. It is generally anti-bacterial and is made from ‘cowdung’. Further, the benefits arising from usage of’hawan samagari’ are commonly understood to be as follows:-

2.3.1. Purifies the surrounding air;

2.3.2. Reduction in bacterial count post performance of Yajna;

2.3.3. Helps in fire burning throughout the Yajna

x) Applicant submits that the above benefits which occur from the usage of ‘hawan samagri’ would equally ensue its customers. In view of the same, Subject Goods merit classification as ‘hawan samagri’ and the GST rate applicable to ‘hawan samagri’ shall apply to Subject Goods as well. Further, merely because the Subject Goods are in the form of ‘sticks’ it shall not make any difference to the HSN classification as there is no restriction or description on the form of “hawan samagri” under the Goods Rate Notification and thus all forms of ‘hawan samagri’ whether in solid or powdered or slicks or any other form shall be covered under the meaning of ‘hawan samagri’. further, from the open market purchase of “hawan samagri” by the Applicant it can be seen that “hawan samagri is described as ‘cowdung cake In the market and thus the trade and industry Recognizes “cowdung cake” as “hawan samagri” only. (Image of packing/label containing hawan samagri” obtained from open market is enclosed herewith and marked as ‘Annexure 5″)

y) Thus, as per S. No. 263A of Schedule I to the Goods Rate Notification ‘hawan samagri’ falling under any chapter is taxable to GST @3%. Accordingly, the Subject Goods shall be taxable to GST @5% irrespective of chapter heading and HSN classification. Based on the above, the Applicant humbly request for pronouncement of the ruling on the questions raised in the application.

z) Without prejudice to the above, the Applicant respectfully requests Your Honor to grant an opportunity of personal hearing in this matter in order to explain the matter more lucidly. The Applicant reserves their right to modify, rescind or alter any part of submissions and to place additional evidence in support of their contention at the time of personal hearing.

6. Accordingly hearing was fixed on 06.04.2021 which was attended by Mr. Ashwarya Sharma, Advocate on behalf of the applicant and he reiterated the facts as stated by the applicant in their application.

DISCUSSION & FINDINGS:

1. We have gone through the application filed by the applicant for Advance ruling and the supporting documents submitted by them as well as oral submission made by the Authorised Representative of the applicant, Mr. Ashwarya Sharma, Advocate, at the time of personal hearing held on 06.04.2021. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant’s interpretation of law.

2. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act of Uttarakhand State are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the SGST Act.

3. To proceed in the instant case, let us first have a look on the ingredients of the subject product to be supplied and description given on the package of the said product.

4. The applicant themselves have stated that they have developed a new product called “Gomaya Samidha” to be used in the process of performing ‘hawan’ i.e. ‘Yajna’ and the relevant ingredients used for the manufacture of said product are 95% cowdung & 5% herbs. It means characteristics of cowdung has been changed and it does not remain purely cowdung.

5. Their in-house Lab report mentions the ingredients of the product as 95% cowdung & 5% herbs and also mentions the commodity as Gomaya Samidha (Cow Dung sticks). This lab report itself is not correct because a mixture of cowdung and herbs cannot be mere a cowdung stick.

6. On perusal of packaging of the subject product, it can be seen that “Gomaya Samidha” is printed at front side on the top of package and “Patanjali Ayurved ka utpad” is printed on the bottom of that package. As far as mention of manufacturer printed on the back side of said package is concerned that is not part of our discussion because manufacturer’s name is written on the every package of any product and the same cannot be a brand name in view of case laws cited by the applicant.

7. Further, on the backside of said package following descriptions are given.

I. Main ingredients present In cowdung- Nitrogen, Phosphorous, potassium, Magnesium, Calcium, Sodium etc.

II. Astha Gaumaya samindha Is made from best quality ingredients & aimed to creating a divine atmosphere.

8. In the said package, it is nowhere written that it is “Hawan Samagri” though a picture of two saint like persons performing hawan i.e, ‘yajna’ is printed on the front of said package just below the wording “Gomaya Samidha” to give an impression that it Is used for hawan or yajna.

9. Now we will consider the questions put forth by the applicant one by one. The first question Put forth by the applicant is “as per the facts and circumstances as explained in Annexure-I supra, what is the correct classification (HSN Code) for Subject Goods i.e. ‘Gomaya Samidha’.

10. As per CGST Tariff, 2017, Chapter Heading 3101 covers the following goods:

3101 00 – Animal or vegetable fertilisers, whether or not mixed together or chemically treated; fertilisers produced by the mixing or chemical treatment of animal or vegetable products:
3101 0010 — Guano
— Other;
3101 00 91 —- Animal dung
3101 00 92 —- Animal excreta
3101 00 99 —- Other”.

The applicant themselves have described the said item as a combination of Nitrogen, Phosphorous, Potassium, Magnesium, Calcium, Sodium etc. and also stated in their application that it is a mixture of 95% cowdung & 5% herbs. Cowdung is a kind of animal dung and covered under subheading no.31010091 which proves that it is also a fertilizer. Since all these qualities of the subject product fulfils the criteria of being a fertilizer hence it is covered under chapter heading no.3101. Cowdung is used as organic fertilizer for agriculture. If 5% herbs is mixed with it even then it does not lose its characteristics of being an organic manure i.e. natural organic fertilizer. Though both ‘cowdung’ and “cowdung mixed with herbs” are organic manure yet “cowdung mixed with herbs” cannot be simply said as cowdung but it becomes organic manure having all the nutrients obtained from natural sources. Thus the subject product is not classifiable under sub-heading no.31010091 meant only for Animal dung.

Sub-heading 31010099 may cover organic manure. Manures are plant and animal wastes that are used as sources of plant nutrients. They release nutrients after their decomposition. Manures are the organic materials derived from animal, human and plant residues which contain plant nutrients in complex organic forms. Naturally occurring or synthetic chemicals containing plant nutrients are called fertilizers. Major sources of manures are:

As per Wikipedia, “Manure is organic matter that is used as organic fertilizer in agriculture. Most manure consists of animal feces. Other sources include compost and green manure. Manures contribute to the fertility of soil by adding organic matter and nutrients, such as nitrogen, that are utilised by bacteria, fungi and other organisms in the soil. Higher organisms then feed on the fungi and bacteria in a chain of life that comprises the soil food web”.

Therefore, “cowdung mixed with herbs” being organic manure is more suitably covered under sub-heading no. 31010099 meant for ‘Others’ of the said chapter heading 3101. 11. Second question raised by applicant is whether “Gomaya Samidha” is exempt from levy of GST in terms of S. No. 108 of Notification No.2/2017 – Central Tax Rate dated 28th June, 2017 or in the alternative in terms of S.No. 113 of Notification No.2/2017 – Central Tax Rate dated 28th June, 2017?

12. Further, as per SI. No. 108 of the Notification No.2/2017 – Central Tax Rate dated 28th June, 2017, exemption is granted to Chapter Heading no. 3101 as per following schedule:

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
notification No.2/2017- Central Tax Rate F.No.354/117/2017-TRU
Dated 28th June, 2017

In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts intra-State supplies of goods, the description of which is specified in column (3) of the Schedule appended to this notification, falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedule, from the whole of the central tax leviable thereon under section 9 of the Central Good and Services Tax Act, 2017 (12 of 2017).

Schedule

S.No. Chapter Heading/Subheading/ Tariff item Description of Goods
(1) (2) (3)
108 3101 All goods and organic manure other than those put up in unit container and, –

(a) bearing a registered brand name; or

(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available (other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily, subject to the conditions as in the ANNEXURE I)

(a) bearing a registered brand name; or

(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available (other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily, subject to the conditions as in the ANNEXURE I) Entry no. 108 as above covers “All goods” of Ch. Heading 3101 and Organic Manure but excludes these items if put up in unit container and bear a registered brand name or brand name on which an actionable claim or enforceable right in a court of law is available (other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily, subject to the conditions as in the ANNEXUREI). In other words, branded goods of chapter heading 3101 and branded organic manure are not covered under entry no. 108 above.

13. To ascertain the correct entry of the subject product, first of all it is necessary to clarify whether the said product is a brand name or not. The applicant is not selling the said product as Hawan Samagri. It is a mixture of cowdung & herbs and hence it does not remain purely a cowdung as the characteristics of cowdung has been changed by mixing of the herbs with it. On the package “Gomaya Samidha” and “Patanjali Ayurved ka utpad” are printed on the front side of the package. In other words applicant has linked the wording “Gomaya Samidha” with the wording “Patanjali Ayurved ka utpad” i.e. a product of Patanjali Ayurved. It means no other manufacturer can mention the mixture of cowdung & herbs as “Gomaya Samidha” because the product with this name supplied in unit container is linked with Patanjali Ayurved. If it is written only “A mixture of cowdung & herbs” or “Hawan Samagri” then it cannot be a product solely developed by Patanjali Ayurved Ltd but when they have given the said product a specific name and also linked the same with their name then a connection has been created between the product and the applicant which cannot be separated. “Gomaya Samidha” is specially invented word for the cowdung mixture to be supplied for the purpose of Yajna as per applicant. In common parlance no one knows what the “Gomaya Samidha” is, but when the applicant publicizes it as Hawan Samagri only then its purpose come to the knowledge. The applicant cannot say that they will not make actionable claim against any other manufacturer who will supply that so-called Hawan Samagri in the name of “Gomaya Samidha”.

“Patanjali Ayurved ka utpad” has been intentionally printed by the applicant with the product name “Gomaya Samidha” despite the fact that manufacturer’s name is already printed on the backside of the said package. it is concluded that “Gomaya Samidha” is a brand name of Patanjali Ayurved ltd.

14. Since the applicant wants to supply “cowdung mixed with herbs” in the name of Hawan Samagri even then they have not clearly mentioned this product as Hawan Samagri in the packages. They have left it totally on the public’s discretion whether they buy it for the purpose of Yajna or for any other purpose. It is nothing but an organic manure packed in unit container with a brand name “Gomaya Samidha”- “Patanjali Ayurved ka utpad”. If the applicant print only cowdung on the package then they cannot mention it on the package as “Patanjali Ayurved ka utpad” i.e. A product of Patanjali Ayurved and public at large will buy it for different purposes and not only for Hawan or Yajna purpose as the applicant has tried to give impression that the said product i.e. Gomaya Samidha is a Hawnn Samagri. For classifying any product. its use becomes irrelevant, Organic manure will always remain organic manure irrespective of its use by the public at large, We also find that Animal Dung of chapter heading 3101 covered under “All goods” and organic manure are separately mentioned under SINO. 108 of the Notification No.2/2017 – Central Tax Rate dated 28th June, 2017. Thus “mixture of cowdung & herbs” is merely not a cowdung but an “Organic Manure” by its texture. Since it is an organic manure having natural nutrients hence can be used for various purpose and not only as fertilizer. Therefore “Gomaya Samidha” is not covered under Sl.No.108 of chapter heading 3101 of ExemptionNotification No.2/2017 – Central Tax Rate dated 28th June, 2017 being a branded item.

15. Now we come to S.NO. 113 of the said Notification which states as follows:

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No.2/2017 – Central Tax Rate F.N0.354/117/2017-TRU
Dated 28th June, 2017

In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts intra-State supplies of goods, the description of which is specified in column (3) of the Schedule appended to this notification, falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedule, from the whole of the central tax leviable thereon under section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017).

SCHEDULE

S.No. Chapter Heading/Subheading Tariff item Description of Goods
(1) (2) (3)
113 4401 Firewood or fuel wood

Chapter heading no.4401 covers only “Firewood or Fuel wood”. To be covered under this chapter, a product must be originated from wood. Every fuel stick that caught fire cannot be said as firewood and covered under this chapter heading. Cowdung will always remain cowdung irrespective of the fact that in what form it is supplied. “Firewood or Fuel wood” does not mean any product that has burning qualities.

As per Wikipedia, firewood & fuelwood are described as under:

1. Firewood is any wooden material that is gathered and used for fuel. Generally, firewood is not highly processed and is in some sort of recognizable log or branch form, compared to other forms of wood fuel like pellets or chips. Firewood can be seasoned (dry) or unseasoned (fresh/wet). It is generally classified as hardwood or softwood.

2. Wood fuel (or fuelwood) is a fuel such as firewood, charcoal, chips, sheets, pellets, and sawdust. The particular form used depends upon factors such as source, quantity, quality and application.

The subject product i.e. Gomaya Samidha is made from cowdung & herbs which are definitely not a kind of wood, hence also not exempt under si.no.113 of the aforesaid notification.

16. Third question raised by the applicant is whether the Subject Goods i.e. “Gomaya Samidha” is leviable to GST @5% in terms of S. No. 182 of Schedule I to Notification No.1/2017 – Central Tax Rate dated 28th June, 2017.

17. S. No. 182 of Schedule 1 to Notification No.1/2017 – Central Tax Rate dated 28th June, 2017 states as follows:

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No.I/2017-CentraI Tax (Rate)
New Delhi, the 28th June, 2017

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies the rate of the central tax of- (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule Il, (iii) 9 per cent. in respect of goods specified in Schedule Ill, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on intraState supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, subheading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules.

Schedule I-2.5%

S.NO. Chapter Heading/Subheading /tariff item Description of Goods
(1) (2) (3)
182 3101 All goods i.e. animal or vegetable fertilisers or organic fertilisers put in unit containers and bearing a brand name

All goods i.e. animal or vegetable fertilisers or organic fertilisers put in unit containers and bearing a brand name As per above description of S.No.182, it is observed that this entry covers all the goods of chapter heading no.3101 i.e. animal or vegetable fertilisers or organic fertilisers put up in unit containers and bearing a brand name. As already discussed in the foregoing paras, “Gomaya Samidha” is nothing but organic manure or natural organic fertilizer as it has all the natural nutrients for agriculture. The applicant also intends to supply it in unit containers with brand name “Gomaya Samidha” – “Patanjali Ayurved ka utpad”. Therefore, aforesaid entry no. 182 is more suitable to cover the subject goods and accordingly liable to be taxed under this entry.

18. The fourth question raised by applicant is whether the Subject Goods i.e. ‘Gomaya Samidha’ is leviable GST @5% in terms of S. No. 263A of Schedule I to Notification No. 1/2017-Central Tax Rate dated 28th June, 2017.

19. S. No. 263A of Schedule I to Notification No. 1/2017-Central Tax Rate dated 28th June, 2017 is stated as below:

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No.1/2017-Central Tax (Rate)
New Delhi, the 28th June, 2017

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies the rate of the central tax of- (i) per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule Il, (iii) 9 per cent. in respect of goods specified in Schedule Ill, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on intraState supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, subheading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules.

Schedule I-2.5%

S.No. Chapter Heading/Subheading/Tariff item Description of Goods
(1) (2) (3)
263A Any chapter Rosaries, prayer beads or Hawan Samagri

Above S.No.263A covers Hawan Samagri. To be eligible for this entry, the product must be recognised as Hawan Samagri from its texture which can only be used for Hawan or Yajna purpose. But the subject product i.e. “Gomaya Samidha” is not a Hawan Samagri as already discussed at Para 11 & 12 above. They themselves stated in their application that it is cowdung though not correct as it is a mixture of cowdung & herbs. Cowdung may be a part of Hawan Samagri but it itself is neither a complete Hawan Samagri nor it is recognised like that. If we visit the various websites for Hawan Samagri then we find that it is a product manufactured by mixing of various herbs including more than 51 ingredients. In fact the applicant is separately supplying their two products viz. Patanjali Astha Hawan Samagri & Patanjali Divya Hawan Samagri where no brand name is mentioned as these products are being supplied in the name of Hawan Samagri as is commonly known in the trade which any other manufacturer can supply. But the applicant has not described “Gomaya Samidha” as Hawan Samagri except that they have printed a picture of two saints like persons performing Yajna just to give the impression that it is for Hawan or Yajna purpose. Further, in common parlance, cowdung is known as organic fertilizer and not Hawan Samgri

The Hon’ble Supreme court in case of Commissioner of Central Excise Delhi-Ill Vs ws UNI Products India Ltd reported as 2020-TIOL-91-SC-CX has held that,-

“26. The main argument of the appellant is that because the car mats are made specifically for cars and are used also in cars, they should be identified as parts and accessories. But if we go by that logic, textile carpets could not have been excluded from Parts and Accessories. We have referred to such exclusion in the preceding paragraph. It has also been urged on behalf of the revenue that these items are not commonly identified as carpets but are different products. The Tribunal on detailed analysis on various entries, Rules and Notes have found they fit the description of goods under chapter heading 570390.90. We accept this finding of the Tribunal. Once the subject goods are found to come within the ambit of that sub-heading, for the sole reason that they are exclusively made for cars and not for “home use” (in broad terms), those goods cannot be transplanted to the residual entry against the heading 8708. As we find the subject-goods come under the chapter heading 570390.90, and the other entry under the same Chapter forming the subject of dispute in the second order of the Commissioner, in our opinion, there Is no necessity to Import the “common parlance” test or any other similar device of construction for Identifying the position of these goods against the relevant tariff entries “

The applicant also referred following case laws:-

In case of Indian Aluminium Cables Ltd. Vs UOI & Ors. – 1985 (21) E.L.T. 3 (S.C.) the Hon’ble Court held as follows:-

“………………….. This Court has consistently taken the view that, in determining the meaning or connotation of words and expressions describing an article in a tariff schedule, one principle which is fairly well-settled is that those words and expressions should be construed in the sense in which they are understood In the trade, by the dealer and the consumer. The reason is that it is they who are concerned with it and, it is the sense in which they understand it which constitutes the definitive index of the legislative intention”

In Collector of Central Excise, Kanpur Vs Krishna Carbon Paper Co. reported as 1988 (37) E.L.T. 480 (S.C.) the Hon’ble court held as follows:-

“12. It is a well settled principle of construction, as mentioned before, that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature….

But there is a word of caution that has to be borne in mind in this connection, the words must be understood in popular sense, that is to say, these must be confined to the words used in a particular statute and then if in respect of that particular items, as artificial definition is given in the sense that a special meaning is attached to particular words in the statute then the ordinary sense or dictionary meaning would not be applicable but the meaning of that type of goods dealt with by that type of goods in that type of market, should be searched. “

On a careful reading of above decisions we find that since cowdung is a waste of animal and understood as manure in trade by the dealer and consumer as well., hence supplying it in a unit container does not make it Hawan Samgri. We further find that technically cowdung is animal waste and in ordinary meaning it is known as manure in common parlance. If the applicant intends to supply cowdung as Hawan Samagri even then it does not become Hawan Samagri. For the purpose of Hawan or Yajna, public at large will definitely search for only Hawan Samagri and not cowdung.

Thus in view of judgment cited above, an organic manure cannot be placed under entry no.263A of aforesaid notification and hence we can conclude that the subject product “Gomaya Samidha” does not fulfil the criterion of being Hawan Samagri.

RULING

1. “Gomaya Samidha – Patanjali Ayurved ka Utpad” is a brand name of M/s Patanjali Ayurved Ltd. and it is an organic manure covered under Chapter Heading no. 3101.

2. “Gomaya Samidha – Patanjali Ayurved ka Utpad” is not exempt from levy of GST in terms of S.No. 108 of Notification No.2/2017 – Central Tax (Rate) dated 28th June, 2017. Further this product is also not covered under S.No. 113 of Notification No. 2/2017 – Central Tax (Rate) dated 28th June, 2017 and hence not exempt under this entry also.

3. “Gomaya Samidha – Patanjali Ayurved ka Utpad” is leviable to GST @5% in terms of S. No. 182 of Schedule 1 to Notification No. 1/2017 – Central Tax (Rate) dated 28th June, 2017 as the same is covered under this entry.

4. “Gomaya Samidha – Patanjali Ayurved ka Utpad” is not leviable to GST @5% in terms of S. No. 263 A of Schedule I to Notification No. 1/2017 – Central Tax (Rate) dated 28th June, 2017as the same is not covered under this entry.

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