The West Bengal Authority For Advance Ruling (AAR) recently ruled that the supply of baby carriers with hip seat priced below Rs.1000/- per piece would attract a Goods and Services Tax (GST) of 5% while such carriers priced above Rs.1000/- per piece would attract GST at 12%.
The Application for Advance Ruling under Section 97(1) of the CGST Act, 2017 was filed by Butt Baby Enterprise Private Limited, a West Bengal based enterprise involved in the business of manufacture and trading of “Baby Carriers with Hip Seat”.
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The Applicant queried before the AAR whether “Baby Carriers with Hip Seat” may be classifiable under Harmonized System of Nomenclature (HSN) Code 63079099 pertaining to “Other made up textile articles; sets; worn clothing and worn textile articles”; alternatively which HSN Code would be applicable to the products manufactured by the Applicant if not Chapter 63.
It was initially deemed by the Applicant that products manufactured by them were classified under HSN Code 87; specific information pertaining to the Applicant’s manufacturing process and classification of product under HSN Code 87 was submitted as part of the Application, along with the GST break-up devised by the Applicant computed at 18%.
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However, upon discussion with e-commerce retailers, the Applicant realized that Chapter Heading 87 specifically relates to “Vehicles other than railway or tramway rolling-stock and parts and accessories thereof” and does not cover any type of normal fabric or narrow woven fabric, foam or mold – being the dominating raw materials in the Baby Carriers.
Subsequent to such finding, the Applicant was of the opinion that the raw materials used and final product derived is more appropriately classifiable under Chapter 63, based on which the query before AAR was raised.
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The two-member Bench of Dr Tanisha Dutta, Joint Commissioner, CGST & CX and Joyjit Banik, Additional Commissioner, SGST observed the absence of any specific mention of “Baby Carriage with hip seat” under Subheading No.6307, but distinguished that the scope of “other made up articles, including dress pattern” under Chapter No. 6307 is wide enough to include Baby carriage with hip seat.
Considering the submissions and material on record, AAR ruled that the GST leviable on the goods produced by the Applicant may be distinguished on the basis of their pricing and ruled that:
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Sale of Baby Carriers with hip seat priced below Rs.1000/- per unit would be classified under Entry No.224 of Schedule-I of Notification No: 01/2017-Central Tax (Rate) and attract GST at 5% while the same carriers when priced above Rs.1000/- per unit would be classified under Entry No.171 of Schedule-I of Notification No: 01/2017-Central Tax (Rate) and be liable to GST at 12%
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