In re Ventair Engineers (GST AAR Telangana)
Ventair Engineers gets clarity from GST AAR Telangana on tax rates for industrial equipment leasing. Detailed analysis of HSN codes and applicable rates.
Introduction: The Authority for Advance Ruling (AAR) in Telangana has recently provided clarity on the applicable GST tax rate for the rental or leasing charges of industrial equipment with operators in the case of Ventair Engineers. This ruling addresses concerns raised by the applicant regarding potential conflicts in tax rates and provides a comprehensive analysis based on the relevant provisions.
Background: Ventair Engineers, engaged in the manufacture of machinery and equipment, sought an advance ruling on the GST tax rate applicable to the rental or leasing charges for industrial equipment provided with operators. The applicant faced objections from customers, specifically the Naval Dock Yard in Visakhapatnam, regarding the uniform application of an 18% GST rate on all varieties of industrial equipment.
Key Questions Addressed: The primary question posed to the AAR was the applicable GST tax rate on rental or leasing charges for industrial equipment falling under specific HSN codes (84151090, 84798920, 84145930).
Analysis of the Ruling:
1. HSN Code Analysis:
- 84151090: This code covers air-conditioning machines, and the applicable rate of tax is 14% each under CGST and SGST.
- 84798920: Pertains to air humidifiers or dehumidifiers and attracts a combined GST rate of 6% (CGST 6% + SGST 6%).
- 84145930: Involves industrial fans with an electric motor exceeding 125 W, falling under a GST rate of 9% each (CGST 9% + SGST 9%).
2. Classification under GST Notification: The AAR referred to Notification 11/2017, emphasizing sub-entry (viia) of entry 17, which deals with leasing or renting of goods with operators. The ruling clarified that the applicant’s services fall under this category, and the tax rate is the same as applicable on the supply of such goods.
3. Applicable GST Tax Rates:
