What rate of GST shall be applicable on Psyllium husk powder 5% or 18%?

PJ/Case Study/2020-21/155

23 May 2020

M/s Sarda Bio Polymers Pvt. Ltd. (AAR No. RAJ/AAR/2020-21/02) dated 06.05.2020

Issue involved: What rate of GST shall be applicable on Psyllium husk powder 5% or 18%?
Brief Facts: M/s Sarda Bio Polymers Pvt. Ltd. is engaged in manufacture of Psyllium husk powder and registered under GST. They procure psyllium husk which is crushed to form psyllium husk powder.

Applicant’s Contention: The assessee has contended in the following manner

The present application for advance ruling has been filed to confirm the classification of Psyllium Husk Powder and the rate of GST applicable thereon. In order to arrive at perfect conclusion, it is pertinent to make reference to various aspects that aid in the classification of their product Psyllium Husk Powder under GST regime.
The applicant submits that their product “Psyllium Husk Powder” is not expressly defined anywhere either in the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 prescribing GST rates for levy of CGST or in the Notification No. 1/2017-Integrated Tax (Rate) dated 28.05.2017 prescribing GST rates for levy of IGST. Consequently, the rate of GST applicable on the product “Psyllium Husk Powder” is 18% under the residual entry which reads as follows:-

Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 prescribing CGST rate of 9%

*S.No.*	*Chapter Heading/Sub Heading/ Tariff Item*	*Description of goods*
*(1)*	*(2)*	*(3)*
453	Any Chapter	Goods which are specified in Schedule I, II, IV, V or VI.

Schedule III of Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017 prescribing IGST rate of 18%

*S.No.*	*Chapter Heading/Sub Heading/ Tariff Item*	*Description of goods*
*(1)*	*(2)*	*(3)*
453	Any Chapter	Goods which are specified in Schedule I, II, IV, V or VI.

The applicant submits that since their product is not expressly specified under any of the serial numbers in Schedule I, II, IV, V or VI, it is covered under above cited serial no. 453 attracting GST rate of 18%.

The applicant further submits that according to serial no. 73 of the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, 2.5% CGST rate has been prescribed. Similarly, as per serial no. 73 of the Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017, Schedule I prescribes IGST rate of 18%. The content of the entry is as follows:-

*S.No.*	*Chapter Heading/Sub Heading/ Tariff Item*	*Description of goods*
*(1)*	*(2)*	*(3)*
73	1211	Plants and parts of plants (including seeds and fruits), of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purpose, frozen or dried, whether or not cut, crushed or powdered

The applicant submits that their product Psyllium Husk Powder does not fall under the above cited entry as the above entry includes plants and parts of plants including seeds and fruits used in pharmacy whether or not crushed or powdered. It is submitted that the applicant is engaged in the process of crushing and powdering the husk of Psyllium and not its seed. The process begins with cleaning of raw seeds and de-husking. The seeds are crushed and husk is separated. The Psyllium Husk Powder is obtained by crushing the pure husk Psyllium. Therefore, it is clear that the product Psyllium Husk Powder is not covered by the above mentioned serial number and is covered by the residuary serial no. 453 specifying GST rate of 18% as stated in preceding paragraphs. The detail of the manufacturing process undertaken is enclosed for ready reference.

The applicant further submits that at times they procure Psyllium Husk Powder from various suppliers and they also charge GST at the rate of 18%. The applicant hereby encloses the specimen copies of invoices wherein GST rate of 18% has been charged. The applicant submits that according to general trade parlance, GST rate of 18% is being charged on supply of Psyllium Husk Powder. Therefore, the applicability of GST rate of 18% should be confirmed on Psyllium
Reasoning by the authority: The authority said that Psyllium is a plant (popularly known as Isabghol) whose parts such as seeds and others are used to prepare some Pharmacy Products specially laxative medicines.
The authority confirmed that Psyllium Husk powder as per notification number 1/2017 Central tax (Rate) dated 28.6 2017 is covered under serial number 73 of schedule 1 of the said notification attracting GST @ 5% the relevant entry in respect of it is as under-

S.No.	Chapter Heading/Sub Heading/Tariff Item	Description of Goods
73	1211	Plant and parts of plant (including seeds and fruits) of a kind used primarily in perfumery in pharmacy or for insecticidal fungicidal or similar purpose, frozen a driven, whether or not crushed or powdered.

Pysllium is a plant which part is crushed in powder form to prepare a pharmaceutical product. The notification explicitly matches the preparation process undertaken by the applicant and moreover, CBSE issued clarification in form of FAQs vide F.No.332/2/2017-TRU in December 2017 regarding classification and rate of GST on psyllium husk and seeds which prescribed rate i.e. 5%
The applicant has contested that as the classification and rate of GST is not mentioned anyway notification number 1/2017, therefore the classification will fall under the residual entry of serial number 453 of schedule III of set notification which is not valid.
Decision: The Rajasthan AAR has pronounced the ruling that Psyllium Plant or its parts is classifiable under HSN 12119032 and attracts GST @ 5% as provided under Notification No. 1/2017 central tax (Rate) dated 28.06.2017.
Conclusion: The applicant has produced invoices wherein they were charging 18% stating that the product is not expressly specified in the rate notifications. But AAR has outlined the judgement of Honourable Supreme court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. wherein it was said that product specific entry cannot be overridden by general/residual entry.
Prepared by CA Akanksha Bohra

Comments

PJ/Case Study/2020-21/155
23 May 2020

Post a Comment

Query