GST Rate of Rubber Wood is 18%: AAR [Read Order]

In an order by the Authority for Advance Ruling, ( AAR ) Kerala, the authority clarified that rate of GST on rubber wood as 18% under the HSN4403.

The applicant, Sri.N.C. Varghese is a small scale contractor engaged in the purchase and cutting and removal of rubber trees from the plantations of certain public sector undertakings owned by the Government of Kerala and also from private individuals. in Kerala. The applicant had participated in the E-Auction for cutting standing rubber trees from the State Farming Corporation Ltd. The tax liability of timber and firewood/fuelwood is explained under HSN code 4401 and there is no direction to collect GST for standing trees of rubber trees which fall under HSN code 06. In spite of any specific direction regarding the GST applicable on standing rubber trees, the State Farming Corporation demanded 18% of live rubber trees.

The applicant preferred an application before Authority for Advance Ruling on the rate of tax of standing rubber trees. It is the belief of the applicant that GST would only be applicable when the standing trees are cut down and separated into timber/wood and fuelwood/firewood. He further contended that during the VAT regime, the Government of Kerala had exempted the rubber trees/rubberwood from the purview of tax, as rubber wood is not used for construction purposes, in order to give relief to the growers.

The Authority comprising of Joint Commissioner, Senthil Nathan IRS, Member CGST & Joint Commissioner (General), N. Thulaseedharan Pillai, Member SGST observed “As per the definition of goods in Section 2(52) of CGST Act, 2017, “goods” means every kind of movable property other than money and securities but includes actionable claim. growing crops. grass and things attached to or forming part of the land which is agreed to be severed before supply or under a contract of supply. ln this case, under the contract of supply, growing crops – i.e., rubber trees are agreed to be severed before supply and hence, comes under the definition of ‘goods’. Thus, standing rubber trees no longer remain as such. Therefore, it can only be treated as ‘wood in the rough form’. In GST, firewood is exempted as per HSN Code 4401. There is no differentiation between softwood and hardwood in GST.”