The Telangana Authority of Advance Ruling (AAR) ruled that the 18% GST payable on the supply of pulpwood.
The applicant, M/s. Gogineni Mohan Krishna is the proprietor of Sri Kodandarama Traders and he is in the business of supplying eucalyptus/subabul wood to paper mills. It is understood by the applicant that the rate of tax to be payable on subabul is 2.5% under CGST & SGST respectively from their reading of notification No.1 of 2017 as mentioned at Sl.No.198 under Chapter 4401 of the HSN Code.
Meanwhile that a circular was issued by CBIC vide Circular No.80/64/2018-GST, dated 31-12-2018 which clarified that the rate of tax applicable to wood logs for pulping is 18% that the applicant finds no merit in the circular for the reason that no provision of law has been mentioned which enable to issue such circular and therefore requested the A.A.R. to dispose of their application independently.
The applicant has sought the advance ruling on the issue that 5% GST is being paid on the supply of pulpwood in terms of Chapter 4401. Whether payment of GST at the said rate of tax is correct.
The Coram of Raghu Kiran and S.V. Kasi Visweswara Rao ruled that The HSN Code 4403 covers “timber for sawing; poles for telephone, telegraph or electrical power transmission lines; unpointed and unsplit piles, pickets, stakes, poles, and props; round pit-up-props; logs; whether or not quarter-split, for pulping; round logs for the manufacture of veneer sheets, etc; logs for the manufacture of match sticks, woodware, etc.”. This HSN code clearly covers poles, props, and logs for pulping. The applicant is supplying logs for pulping therefore the commodity dealt by him HSN code 4403 which is enumerated at Sl.No.134 of Schedule-III and hence taxable at the rate of 9% under CGST & SGST respectively.
Therefore, the AAR held that the Correct HSN is 4403 and the tax rate is 18%.
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