There are various rate changes/exemptions for goods as well as services which have been approved in the GST council meeting held on 21.07.2018. The Notifications giving effect to the same are awaited. Some of the proposed changes in rate are tabulated below:
|Sr. No.||Description||Old Rate||Proposed Rate|
|1.||Paints, Varnishes, Resin cements, Glazier’s Putty||28%||18%|
|3.||Televisions up to the size of 68 cm.||28%||18%|
|5.||Freezers, Refrigerators, Water coolers||28%||18%|
There are various exemptions which have been proposed for services. Some of the exemptions are in respect of sectors of (i) Agriculture, farming and food processing industry; (ii) Education, training and skill development; (iii) Pension, social security and old age support. The GST rate in case of hotel accommodation is proposed to be based on actual transaction value and not the declared tariff.
Changes proposed in ‘Schedule III’ of CGST Act
Scope of the term ‘Input tax Credit’
Other Miscellaneous Proposals
Classification of services – Applicant, in the present case, provides various ‘sourcing support’ services to its associate concern in Hong Kong such as market research, identification of suppliers, inspection and quality control, and logistics. The AAR held that the services of market research provided by the Applicant wherein it advises on best available combination in terms of price, quality and delivery would be taxable under forward charge at 18% under SAC 998371 i.e. Market Research Services.
Further, it held that services of (a) purchases of goods as a sub-sourcing contractor; (b) evaluation of vendors; (c) communication of terms and conditions would be classified under SAC 998599 i.e. Other Support Services n.e.c. and taxable under forward charge at 18%. On the other hand, the quality inspection services and logistics arrangement services would be classifiable under SAC 998311 i.e. Management Consulting and Management Services and taxable at 18% under forward charge.
It may be important to note that AAR refused to delve into the question of whether said services would be considered as ‘Export of Service’ or not since, the examination of ‘Place of Supply’ is outside the jurisdiction of ‘Advance Ruling’. Further, the Ruling does not analyse whether the transaction constitutes a ‘Composite Supply’ or not.
Classification – The question under consideration was whether ‘Brake Pads’ manufactured for motor vehicles by mounting frictional material on the metal sheet would be classified under ITC HSN 6803 or 8708. The Haryana AAR held that the Heading 6803 specifically excludes mounted friction material and articles thereof for brakes and accordingly, the ‘Brake Pads’ would be classified under ITC HSN 87083000 i.e. ‘Brakes and Servo Brakes; Parts thereof’.
Further, the AAR held that in view of Notification 1/2017-Central Tax (Rate) dated 28.06.2017 and corresponding State Tax Notification, ‘Brake Pads’ used for brake assembly and its parts thereof for tractors would be taxed at 18% whereas the ‘Brake Pads’ manufactured as parts and accessories of Motor Vehicles of heading 8701 to 8705 would be taxed at 28%.
Classification – The Applicant is inter alia engaged in the manufacture of Truck Mounted Cranes (TMC). For the said purpose, the Applicant purchases ready-made trucks and manufacture cranes on these trucks. The question raised before the Advance Ruling Authority is classification of the TMC manufactured by the Applicant.
The Haryana AAR held that the product manufactured/supplied by the Applicant is a result of mounting of cranes on ready-made trucks bought by the Applicant and would be classifiable under 8705 (Special Purpose Vehicles) and not under 8426 (Works Truck Fitted with Crane). Since, the Trucks used by the Applicant are not Works truck but are normal ready-made transportation trucks, the same would not be covered under ITC HSN 8426.
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