The Karnataka Authority of Advance Ruling (AAR) ruled that 18% GST is applicable on Parboiling Rice and Drying plant.
The applicant, M/s SKF Boilers and Driers (P) Ltd. has submitted that a paddy processing plant consists of various sections which are involved with the activities of parboiling rice, drying, rice milling, and polishing. Parboiling is a process of soaking, steaming and drying prior to milling.
The applicant has sought advance ruling on the issue of whether the parboiling and the drier plant is part of rice milling machinery as specified in the Notification dated 28-06-2017 under HSN 8437 issued under the CGST Act, 2017 taxable at 5% (2.5% CGST + 2.5% SGST).
Another issue was that if the plant/ machinery is not classified under HSN 8437, whether the same is to be taxed under HSN 8419 at the rate of 18% in the Notification dated 28-06-2017 (9% CGST + 9% SGST).
The coram of Dr. M.P.Ravi Prasad and Mashood Ur Rehman Farooqui held that Parboiling and Drying plant is classified under HSN 8419 Entry No.320 at the rate of 18% as per Notification No. 1/2017 -Central Tax (Rate) dated 28th June, 2017 (9% CGST + 9% SGST) as amended vide Notification No.41/2017-Centra1 Tax (Rate) dated the 14th November, 2017