Rubber Rings used Exclusively in Irrigation Systems attract 5% GST if made of Hard Rubber: AAR [Read Order]

The Rajasthan Authority for Advance Ruling (AAR) recently clarified that “hard rubber” rings derived through vulcanisation process, and designed specifically for use in sprinkler and drip irrigation systems attract a Goods and ServicesTax (GST) at the rate of 5%, even when they are supplied separately as replacement parts.

The applicant M/s Arti Pitaliya is engaged in the manufacture and trade of rubber components used in agricultural irrigation systems and sought clarity on the classification and applicable GST rate for rubber rings made of vulcanized rubber. The subject rubber rings are supplied - either as part of the complete sprinkler or drip irrigation systems, or separately as spare parts routine for maintenance and replacement.

The applicant maintained that the rubber rings are specifically designed and manufactured to fit irrigation equipment only, and had no other independent besides that in the irrigation systems.

Now, the primary dispute was whether these goods should be classified under Heading 4016 as ‘general rubber articles’ and attract 18% GST, or whether they were classifiable under Heading 8424 as ‘parts of sprinkler/drip irrigation systems’, and eligible for the concessional GST rate of 5% under Entry 195B of Notification No. 01/2017-Central Tax (Rate).

The two-member Bench comprising Utkarsha, Member (Central Tax), and Dr. Akhilesh Charan, Member (State Tax) noted that the rubber rings in question were not generic rubber products but were specifically engineered for use in irrigation systems and are supplied to manufacturers, traders and end-users solely for such purposes.

The AAR observed that the rubber rings are manufactured by mixing, moulding and curing of rubber. However, the applicant did not conclusively establish whether the rubber manufactured is “hard rubber” or “other than hard rubber”, since hard rubber is not excluded from Section XVI under Section Note 1(a) or any related provisions.

Accordingly, the AAR affirmed that if the rubber rings are made of hard rubber classifiable under heading 8424, and solely used for irrigation purposes, they shall attract the concessional duty of 5%, but would fail to do so if they are not made of hard rubber or used for general purposes.

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