Rejected Paddy used for Animal Feed, Cattle Feed etc. classified under HSN Code 1006 10 90: AAAR
The Appellate Authority for Advance Ruling ( AAAR ), Chhattisgarh recently affirmed that rejected paddy used for animal feed, cattle feed, poultry feed, manure and industrial use are to be classified under Harmonized System of Nomenclature ( HSN ) Code 1006 10 90.
The clarification was provided by AAAR against an Application for Advance Ruling filed under 101 of the GST Act by Shraddha Traders – an entity operating a rice mill. The Appellant had been awarded tender by the Chhattisgarh State Cooperative Marketing Federation for purchase of Rejected Paddy, out of which a certain portion could be resold by the Appellant.
In a multifaceted application before the AAAR, the Appellant sought the classification and applicability of Goods and Services Tax ( GST ) on the sale of Rejected Paddy Seed in bags of more than 25 Kg and the applicability of S. No. 70 of Notification No. 02/2017 – Central Tax (Rate) dated 28.06.2017.
Shraddha Traders contended that ‘Rice’ under HSN 1006 had previously attracted a GST of 5%, which was reduced to Nil following the Notification No. 02/2017 – Central Tax (Rate) dated 28.06.2017. In similar vein, the appellant sought GST classification for rejected paddy if the same was to be classified under the same HSN Code as Rice.
In the preceding stage, the Authority for Advance Ruling ( AAR ) held that rejected paddy seed would merit classification under HSN Code 100610 while vitiating any probable GST exemption by means of the above-mentioned Notification No. 02/2017 – Central Tax (Rate).
The two-member Bench of Chandra Prakash Goyal and Rajat Bansal disagreed with the ruling of the AAR in classifying rejected paddy under HSN 1006 10 (Rice in the husk) as rejected paddy is completely unfit for human consumption and would warrant a separate classification.
The Bench further clarified that rejected paddy shall be rightly placed under HSN 1006 10 90 but refrained from commenting on its taxability owing to lack of further details regarding the proposed industrial usage of the rejected paddy seed.
This article was been republished from The TaxScan.