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CBIC-190354/36/2021-TRU Section-CBEC
Government of India
Ministry of Finance
(Department of Revenue)
North Block, New Delhi,
Dated the 17th June, 2021
Circular No. 155/11/2021 - GST: Clarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation System
To,
Principal Chief Commissioners/ Principal Directors General, Chief Commissioners/ Directors General,
Principal Commissioners/ Commissioners of GST and Central Tax (AII),
Madam/Sir,
Subject: Clarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation System–regarding.
Representations have been received seeking clarification regarding GST rate on parts of Sprinklers or Drip Irrigation System, when they are supplied separately ( i.e. not along with entire sprinklers or drip irrigation system). This issue was examined in the 43rd meeting of Goods and Service Tax Council held on the 28th May, 2021.
2. The Goods and Service Tax rate on Sprinklers or Drip Irrigation System along with their laterals/parts are governed by S. No. ‘195B’ under Schedule II of notification No. 1/2017- Central Tax (Rate), dated 28th June, 2017 which has been inserted vide notification No. 6/2018- Central Tax (Rate), dated 25th January, 2018 and reads as below:
| S. No. | Chapter Heading/ Sub-heading/Tariff Item | Description of Goods | CGST rate |
| 195B | 8424 | Sprinklers; drip irrigation systems including laterals; mechanical sprayer | 6% |
3. The matter is examined. The intention of this entry has been to cover laterals (pipes to be used solely with with sprinklers/drip irrigation system) and such parts that are suitable for use solely or principally with 'sprinklers or drip irrigation system', as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN. Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which are classifiable under heading 8424, would attract a Goods and Service Tax of 12%, even if supplied separately.
However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract Goods and Service Tax as applicable to the respective heading.
4. Difficulty, if any, may be brought to the notice of the Board immediately. Hindi version shall follow.
Yours faithfully
(Patil Sameer Shivajirao)
OSD, TRU
Email: sameer.sp@gov.in Tel: 011 2309 5543
📚 Frequently Asked Questions (FAQs): Circular No. 155/11/2021 - GST
Q1. What is Circular No. 155/11/2021-GST about?
Answer:
Circular No. 155/11/2021-GST clarifies the GST rate applicable to laterals and parts of sprinkler or drip irrigation systems when they are supplied separately instead of along with the complete irrigation system.
The clarification was issued based on the recommendations of the 43rd GST Council Meeting.
Q2. What GST rate applies to laterals supplied separately?
Answer:
Laterals supplied separately attract 12% GST, provided they are used solely or principally with sprinkler or drip irrigation systems and are classifiable under Heading 8424.
Q3. Does the concessional GST rate apply only when the complete sprinkler system is sold?
Answer:
No.
The circular specifically clarifies that the concessional rate also applies when qualifying laterals or parts are supplied separately, subject to the applicable HSN classification.
Q4. Which HSN heading is relevant for this clarification?
Answer:
The clarification applies to goods classifiable under Heading 8424, including sprinkler systems, drip irrigation systems, laterals, and qualifying parts used solely or principally with such systems.
Q5. What is meant by "solely or principally used"?
Answer:
It means that the part is specifically designed for and primarily intended to be used with sprinkler or drip irrigation systems rather than for general industrial or commercial purposes.
This principle is based on Note 2(b) to Section XVI of the HSN.
Q6. Do general-use parts also qualify for 12% GST?
Answer:
No.
General-use parts classified under HSN headings other than Heading 8424 will attract GST at the rate applicable to their own classification, even if they are capable of being used in irrigation systems.
Q7. Does this circular introduce a new GST rate?
Answer:
No.
The circular only clarifies the applicability of the existing concessional GST rate and explains when separately supplied parts qualify for the benefit.
Q8. Why is HSN classification important in this case?
Answer:
The GST rate depends primarily on the HSN classification of the product.
Businesses must therefore determine whether the part falls under Heading 8424 or another heading before applying the concessional rate.
Q9. Who benefits from this clarification?
Answer:
Manufacturers, dealers, distributors, irrigation contractors, agricultural equipment suppliers, and farmers purchasing replacement parts benefit from the certainty provided by this clarification.
Q10. Does this clarification apply to replacement parts?
Answer:
Yes.
Replacement laterals and qualifying parts supplied separately continue to attract 12% GST, provided they are specifically designed for sprinkler or drip irrigation systems and fall under Heading 8424.
Download PDF: Circular No. 155/11/2021 - GST
More Information: https://taxinformation.cbic.gov.in/
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