Paddle Wheel Aerators Not Classified as Agricultural Machinery: AAR rules 18% GST applicable for Aquaculture Equipment [Read Order]

The Authority forAdvance Ruling (AAR) Gujarat held that Paddle Wheel Aerators being specific equipment used in the operation of aquaculture, are not classified as agricultural machinery. Hence, Paddle Wheel Aerators fall under the mechanical appliances and are liable to a 18% Goods and Services Tax (GST) rate.

The applicant company M/s. Sagar Aqua Culture Private Limited is a manufacturer and supplier of Paddle Wheel Aerators. Paddle Wheel Aerators are necessary for maintaining the levels of dissolved oxygen in aquaculture ponds.

This is a critical requirement for the rearing of fish, prawns, and shrimp. The applicant filed the application to classify whether the Paddle Wheel Aerators fall under HSN 8436, which covers agricultural, horticultural, and poultry-keeping machinery or HSN 8479.

The applicant argued that contemporary aquaculture has been recognized as an extension of agricultural activity. For support they cited the National Policy for Farmers 2007 wherein fishers are included in the definition of farmers.

Moreover, they cited a press release from the Ministry of Fisheries wherein they argued that only 5% GST would be levied on aerators supporting their contention that they fall under HSN 8436.

The Authority comprising Sushma Vora (Member SGST) and Vishal Malani ( Member CGST) in passing judgment, opined that inclusion of fishers in general policy does not mandate that they be included in specific tax classifications. It cited Supreme Court precedents that in interpreting taxation legislation "pisciculture is not agriculture."

It further held that, in any case a press release from the Ministry of Fisheries cannot be utilized in classifying products since taxation legislation is within the sole jurisdiction of the Ministry of Finance. Since no entry specifically covers "aquaculture aerators," the bench ruled that they fall under HSN 8479, attracting an 18% GST.

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