Important Keyword: F. No. 354/255/2018-TRU, Circular No. 54/28/2018-GST, Notification No. 12/2012-Central Excise, Notification No. 1/2017 Central Tax.
F. No. 354/255/2018-TRU (Part-2)
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
North Block, New Delhi
Dated, 9th August, 2018
Circular No. 54/28/2018 – GST
Table of Contents
To
Principal Chief Commissioners/Principal Directors General,
Chief Commissioners/Directors General,
Principal Commissioners/Commissioners,
All under CBIC.
Madam/Sir,
Subject: Classification of fertilizers supplied for use in the manufacture of other fertilizers at 5% GST rate- reg.
References have been received regarding a clarification as to whether simple fertilizers, such as MOP (Murate of Potash) classified under Chapter 31 and supplied for use in manufacturing of a complex fertilizer, are entitled to the concessional GST rate of 5%, as applicable in general to fertilizers (i.e. fertilizers which are cleared to be used as fertilizers).
2.1 The matter has been examined. Chapter 31 of the Customs Tariff Act, 1975 covers Fertilizers. The fertilizers are mostly used for increasing soil and land fertility, either directly, or by use in manufacturing of complex fertilizers. However, certain fertilizers and similar goods falling under this Chapter may be used for individual purposes like use of molten urea for manufacture of melamine and urea used in manufacturing of urea-formaldehyde resins or organic synthesis.
2.2 In the pre-GST regime, the concessional duty rate was prescribed for fertilizers falling under Chapter 31 of the Tariff (notification No. 12/2012-Central Excise). This concessional rate was applied to goods falling under Chapter 31 which are clearly to be used directly as fertilizers or in the manufacture of other fertilizers, whether directly or through the stage of an intermediate product.
3. In the Goods and Services Tax regime, tax structure on fertilizers has been prescribed on the lines of pre-Goods and Services Tax incidence. The wording of the Goods and Services Tax notification is similar to the central excise notification except certain changes to meet the requirements of Goods and Services Tax. These changes were necessitated as Goods and Services Tax is applicable on the supply of goods while central excise duty was applicable on manufacture of goods.
Accordingly, fertilizers falling under heading 3102, 3103, 3104 and 3105, other than those which are clearly not to be used as fertilizers, attract 5% Goods and Services Tax [S. No. 182A to 182D of the First schedule to the notification No.1/2017-Central Tax (Rate) dated 28.06.2017]. However, the fertilizers items falling under the above-mentioned headings, which are clearly not to be used as fertilizer attract 18% Goods and Services Tax [S. No. 42 to 45 of the III schedule to the notification No. 1/2017 Central Tax (Rate)].
The intention has been to provide concessional rate of Goods and Services Tax to the fertilizers which are used directly as fertilizers, or which are used in the manufacturing of complex fertilizers which are further used as soil or crop fertilizers. The phrase “other than clearly to be used as fertilizers” would not cover such fertilizers that are used for making complex fertilizers for use as soil or crop fertilizers.
4. Thus, it is clarified that the fertilizers supplied for direct use as fertilizers or supplied for use in the manufacturing of other complex fertilizers for agricultural use (soil or crop fertilizers), will attract 5% IGST.
Yours faithfully,
Dr. Ajay K. Chikara
Technical Officer (TRU)
Read More: Taxability of services provided by Industrial Training Institutes (ITI).
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