12% GST on Hitherto, Corrugated Boxes and Cartons, clarifies CBIC [Read Circular]

GST - Hitherto, Corrugated Boxes - Cartons, clarifies - CBIC - Taxscan

The Central Board of Indirect Taxes and Customs (CBIC) issued a circular in respect of clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 45th meeting held on 17th September 2021 at Lucknow.

The Board has received representations seeking clarification regarding the distinction between fresh and dried fruits and nuts and applicable GST rates.

At present, fresh nuts (almond, walnut, hazelnut, pistachio, etc) falling under heading 0801 and 0802 are exempt from GST, while dried nuts under these headings attract GST at the rate of 5% or 12%. The general Explanatory Notes to chapter 08 mentions that this chapter covers fruit, nuts intended for human consumption. They may be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling in water or containing added sweetening matter), or dried (including dehydrated, evaporated, or freeze-dried). Thus, the HS chapter differentiates between fresh, frozen, and dried fruits and nuts. Fresh fruit and nuts would thus cover fruit and nuts which are meant to be supplied in the state as plucked. They continue to be fresh even if chilled. However, fruit and nuts do not qualify as fresh, once frozen (cooked or otherwise), or intentionally dried to dehydrate, including through sun drying, evaporation or freezing, for supply as dried fruits or nuts. It may be noted that in terms of note 3 to Chapter 8, dried fruits, even if partially rehydrated, or subject to preservation say by moderate heat treatment, retain the character of dried fruits or dried nuts.

Therefore, exemption from GST to fresh fruits and nuts covers only such products which are not frozen or dried in any manner as stated above or otherwise processed. Supply of dried fruits and nuts, falling under heading 0801 and 0802 attract GST at the rate of 5% or 12% as specified in the respective rate Schedules.

It has been clarified that pure henna powder and henna leaves, having no additives, are classifiable under tariff item 1404 90 90 and shall attract a GST rate of 5%. Further, the GST rate on mehndi paste in cones falling under heading 1404 and 3305 shall be 5%.

The circular stated that flavored and coated illaichi generally consists of Cardamom Seeds, Aromatic Spices, Silver Leaf, Saffron, Artificial Sweeteners. It is distinct from illaichi or cardamom (which falls under heading 0908). It is clarified that flavored and coated illaichi is a value-added product and falls under sub-heading 2106. It accordingly attracts GST at the rate of 18%.

Corrugated boxes and cartons, falling under heading 4819 attracted GST at the rate of 12% (entry 122 of 12% rate schedule), while other cartons falling under this heading attracted GST at the rate of 18%. Disputes have arisen as regards applicable GST on fiber drums, which is partially corrugated (as to whether it can be treated as corrugated or otherwise). This dispute gets resolved on account of the recommendation of the GST Council, in its 45th meeting, to prescribe a uniform GST rate of 18% on all goods classifiable under heading 4819 (with effect from 1st October 2021 under S. No. 153A of Schedule III of notification No.1/2017-Central Tax (Rate) dated 28.6.2017).

“For the period prior to 1.10.2021, the Council upon taking note of the fact that there was ambiguity regarding the GST rates applicable on a Fibre Drums, because of its peculiar construction (partially corrugated), has decided that supplies of such Fibre Drums even if made at 12% GST (during the period from 1.7.2017 to 30.9.2021), would be treated as fully GST-paid. Therefore, no action for recovery of differential tax (over and above 12% already paid) would arise. However, as this decision has only been taken to regularize the past practice in view of certain ambiguity, as detailed in para 14.1, no refund of GST already paid shall be allowed if already paid at 18%,” the CBIC in the circular clarified.

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