Delhi HC to Decide GST Rate on Railway AC Units: 28% as General ACs or 18% as Railway Parts? [Read Order]
Delhi High Court to adjudicate classification of Railway AC Units for GST rate purposes amidst challenge to Circular prescribing 28% GST.
![Delhi HC to Decide GST Rate on Railway AC Units: 28% as General ACs or 18% as Railway Parts? [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/railway-ac-units-site-img.jpg "Delhi HC to Decide GST Rate on Railway AC Units: 28% as General ACs or 18% as Railway Parts? [Read Order]")
In a pending writ petition, the Delhi High Court is examining whether Roof Mounted Package Unit (RMPU) air conditioning machines, specifically manufactured for Indian Railways, should be classified under HSN 8415 (attracting 28% GST) or HSN 8607 (attracting 18% GST applicable to railway parts). The petition has been filed by M/s Stesalit Limited (petitioner) challenging Circular...
In a pending writ petition, the Delhi High Court is examining whether Roof Mounted Package Unit (RMPU) air conditioning machines, specifically manufactured for Indian Railways, should be classified under HSN 8415 (attracting 28% GST) or HSN 8607 (attracting 18% GST applicable to railway parts).
The petition has been filed by M/s Stesalit Limited (petitioner) challenging Circular No. 235/2024-GST dated 11th October 2024, issued by the Department of Revenue, Ministry of Finance. The circular clarified that RMPU air conditioners are to be classified as air conditioning machines under HSN 8415, and not as railway parts under HSN 8607.
The Petitioner counsel contended that the impugned circular lacks jurisdiction and undermines earlier classifications consistently accepted under HSN 8607. The counsel argued that RMPUs are designed and manufactured exclusively as per Indian Railways' specifications and are not general-purpose air conditioners.
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The petitioner relied on three Advance Rulings by authorities in Uttar Pradesh, Madhya Pradesh, and Himachal Pradesh in which each classifying the RMPUs under HSN 8607 and applying an 18% GST rate. The ruling from the jurisdictional authority in Himachal Pradesh was also cited, which held that RMPUs manufactured exclusively for the Railways fall under Chapter 86.07.
On the other hand, the Revenue defended the circular on the basis of the Customs Tariff’s Section Notes, asserting that goods under heading 8415 are explicitly excluded from being treated as ‘parts’ under Chapter 86.
During the hearing, the Court observed that a Show Cause Notice had been issued to the petitioner post-hearing, raising demands based on the revised classification. The petitioner expressed concern that in light of the circular, adjudication proceedings would be rendered ineffective.
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A bench comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed that a Show Cause Notice had been issued to the petitioner post-hearing, raising demands based on the revised classification. The petitioner expressed concern that in light of the circular, adjudication proceedings would be rendered ineffective.
The Court has permitted the adjudication proceedings to continue but directed that any final order passed shall not be given effect without the leave of the Court. The court directed the adjudicating authorities to consider the petitioner’s reply, the Advance Rulings, and the impugned circular during adjudication. The matter is next listed for hearing on 9th May 2025.
To Read the full text of the Order CLICK HERE
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