ELP GST Update

No. 275/15/2018-CX.8A dated July 4, 2018

CBIC has highlighted that instances have come to the notice of the Board wherein Government Counsels are not being assisted properly by Departmental authorities/representatives whilst defending the Union of India and Ors. in the Hon’ble High Court. In this regard, it has issued an advisory directing that Counsels representing Departments are promptly and effectively briefed by the Departmental representatives. Further, the advisory states that it must be the endeavour of the Department to avoid any adverse orders/strictures and that all necessary measures are taken efficaciously to defend GST related Writ Petitions in High Court.

M D Mohta [TS-283-AAR-2018]

 Taxability – The applicant is engaged in the manufacture and supply of ‘Rakhis’ (including decorative, designer and fancy Rakhis). These Rakhis inter alia consists of cotton thread, glass beads, plastic beads, Rudraksh, Zari, Kalava, etc. The West Bengal Authority of Advance Ruling held that ‘Rakhi’ does not qualify as a handicraft item and hence, the applicant cannot avail the exemption on supply of handicraft items for persons opting for composition levy. It also held that ‘Rakhi’ is not purely a “puja samagri” as it is not an essential and integral part of any puja or religious ceremony. Further, Rakhi would also not be classified as ‘Kalava’ (which is Nil rated under GST) as ‘Kalava’ may only be one of the elements in a Rakhi. There are various other designer elements which would be used in the crafting of a ‘Rakhi’ to form its essential character.

The Ruling held that taxability of a Rakhi would depend on its essential constituents involved and would be classified and taxed accordingly.

Mega Flex Plastics Ltd  [TS-282-AAR-2018-NT]

 Classification – The question under consideration was whether Polypropylene leno bags would be classified under Tariff Heading 6305 33 00 (Sacks and bags, of a kind used for packing of goods) or 3923 29 90 (Sacks and bags made of plastics other than polymers of ethylene but not poly).

The West Bengal Authority for Advance Ruling upon referring to Explanatory notes and clarifications under the GST Tariff held that Polypropylene leno bags made from polypropylene fabrics with a width not exceeding 5 mm and without any impregnation, coating, covering or lamination would be classified under Tariff Heading 6305 33 00.