18% GST applicable on Transformers supplied to Indian Railways: AAR [Read Order]

Indian Railways - Transformers - AAR - GST - Taxscan

The Maharashtra Authority of Advance Ruling (AAR) on an application made by an applicant held that the ‘transformers’ supplied to Indian Railways is covered under HSN ‘8504’ and Sr. No. 371 of Schedule III of the notification 1/2017 pertaining to the central Tax (Rate) and as a consequence the applicant is liable to pay @18% of Goods and Service Tax (GST).

The applicant named Rishab Industries which is engaged in the manufacturing of transformers, panels and magnetic compounds which is authorized by the Research Design and Standard Organisation (RDSO). The applicant developed the transformers for Indian Railway with the purpose to support passenger coaches. The transformers manufactured are the primary source for the generation of electricity in order to run the fan, A/Cs, lights and charging points for the passengers within the coaches. All the inputs such as super enamelled copper strips and wires, electrical steel cold rolled grain oriented silicon steel lamination, stainless steel and other insulating items that are manufactured and used in the transformers are taxable @18% of Goods and Service Tax (GST).

The issue raised in the application was whether the transformers which were supplied to the Indian Railways are classified as ‘part of railway or tramway locomotives or rolling stock i.e. HSN ‘8607’ and as a consequence subjected to @5% of Goods and Service Tax (GST) or the transformers can be categorized under HSN ‘8504’ and as a consequence subjected to @18% of Goods and Service Tax (GST)?

The Maharashtra Authority of Advance Ruling (AAR) comprises Smt. P. Vinitha Sekar, Additional Commissioner of Central Tax and Shri. A.A. Chahure, Joint Commissioner of State tax held that the transformers supplied by the applicant to the Indian Railways are covered under HSN ‘8504’ and Sr. No. 371 of Schedule III of the notification 1/2017 pertaining to the central Tax (Rate) and as a consequence, the applicant is liable to pay @18% of Goods and Service Tax (GST).

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