Fly Ash Bricks Attract 12% GST with ITC or 6% without ITC, Not Eligible for Composition Scheme: AAR [Read Order]

The Tamil Nadu Authority for Advance Ruling (AAR) has ruled that Fly Ash Bricks attract a 12% GST rate with Input Tax Credit (ITC) or a 6% rate without ITC, and that manufacturers are not eligible for the Composition Scheme.

M/S. SRS Industries, the applicant, a proprietary concern engaged in the manufacture of Fly Ash Bricks, filed an application for Advance Ruling under Section 97 of the CGST Act, 2017. The applicant sought a ruling on eight questions, including the correct HSN code, applicable GST rate, eligibility for exemption, and availability of Input Tax Credit (ITC) for Fly Ash Bricks containing more than 51% fly ash. The applicant submitted that based on a Gujarat High Court order, the rate of GST on Fly Ash Bricks should be 5%.

The Authority, comprising Shri C. Thiyagarajan, Member (CGST) and Shri B. Suseel Kumar, Member (SGST), addressed the application on its merits. It ruled that the correct HSN code for Fly Ash Bricks is 6815 99 10. Regarding the tax rate, the AAR clarified that from 18.07.2022, Fly Ash Bricks attract an overall GST rate of 12% (CGST 6% + SGST 6%), irrespective of the fly ash content, as per Notification No. 6/2022-Central Tax (Rate).

The Authority further explained that manufacturers have two options: 1) Pay 12% GST and claim ITC on inputs, or 2) Pay a concessional 6% GST (CGST 3% + SGST 3%) without claiming ITC, as per Notification No. 02/2022-Central Tax (Rate). Since the applicant confirmed during the personal hearing that they avail ITC, they are required to pay tax at the 12% rate.

The AAR ruled that Fly Ash Bricks are not eligible for any special exemption or reduced rate, even when sold to government entities. The supply is subject to GST under the forward charge mechanism, not reverse charge. Regarding the composition scheme, the Authority held that manufacturers of Fly Ash Bricks are not eligible to opt for the scheme under Section 10(1) of the CGST Act, 2017, as per Notification No. 16/2022. The Authority declined to rule on the question regarding the GST rate of fly ash as a raw material, stating it was outside the purview of an advance ruling.

The bench provided detailed rulings on each of the applicant's questions, clarifying the taxability, ITC eligibility, and ineligibility for the composition scheme for manufacturers of Fly Ash Bricks.

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