Thermal-based Fogging Machine attracts 18% GST : AAR [Read Order]

Thermal - Fogging - Machine - GST - AAR - TAXSCAN

In a recent ruling, the Haryana Authority for Advance Rulings (AAR) ruled thermal based fogging machine attracts 18% of the GST.

M/S 100X Circle Pvt. Ltd, the Applicant is a manufacturer of fogging machines operating in the market of B2G (Business to Government Sector) which are being used for mosquito control/ Health/pest/vector control and similar applications.

The applicant has been applying for government tenders and charging GST @ 18% rate on all their tax invoices while the competitors are charging GST @ 12% on the same product which has resulted in ambiguity and confusion in the marketplace regarding the correct GST rate over the concerned product. Further, since the applicant is charging tax at a higher rate compared to their competitors, the applicant is becoming costly and is losing on various bids and tenders.

 The applicant charges 18% tax in their invoice, declares the same in their GSTR I and E way bill and dispatches material. “Mechanical appliances (whether or not hand-operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines (other than sprinklers; drip irrigation systems including laterals; mechanical sprayer; works for drip irrigation equipment or nozzles for sprinklers”

The applicant is manufacturing thermal fogging machines which are being used for mosquito/health/ pest/ vector control. ‘The machine is so manufactured and uses thermal heat energy to convert the chemical liquid into fog using a pulse jet engine inside the machines, the diesel mixed with medicine/chemical is converted into fog which is disbursed/ projected into the affected area.

During the proceedings, the applicant has apprised that on the said goods they are charging a GST rate of 18 % whereas his competitors are charging 12 % on the same product which has resulted in ambiguity regarding the classification of the goods under the provisions of the GST Act, 2017. So, he has sought an advanced ruling on the matter.

A two-member bench comprising Sunder Lal and Kamud Singh observed that in general and technical terms a fogging machine is a mechanical appliance. As a fogging machine convert the liquid inside it into another state of matter before disbursing the same in the form of a haze. These vapours are transported via the machine’s nozzle and released into the atmosphere. The disinfectant or chemical liquid administered through a fogging machine spreads on both surfaces as well as in the air itself. The micro-droplets of disinfectant or chemical solution remain on surfaces for a longer period. The thin fog penetrates smaller and hidden surfaces and even reaches into corners and difficult regions.

From the process of fogging, it can be said that fogging machines are appliances with converting the state of matter from one to another i.e. liquid to gas and not just spray the liquid, the machine are to be classified as mechanical appliances. 

Further held that the thermal-based fogging machines used for mosquito/health/ pest/ vector control can be classified as mechanical sprayers under entry no. 195B of Schedule Il of Notification no 1/2017 Central Tax (Rate) dated 28th June 2017 as amended from time to time or under entry no. 325 of schedule Ill-“Mechanical appliances (whether or not hand-operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers whether or not charged, spray guns and similar appliances, steam or sand blasting machines and similar jet projecting machines (other than sprinklers; drip irrigation systems including laterals; mechanical sprayer, nozzles for drip irrigation equipment or nozzles for sprinklers.

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