Concessional GST On Irrigation Rubber Rings Conditional On Hard Rubber Use: Rajasthan AAR

The Rajasthan Authority for Advance Ruling (AAR) has held that rubber rings used in sprinkler or drip irrigation systems will qualify for concessional Goods and Services Tax (GST) only if they are made of hard rubber and used exclusively for irrigation purposes, and not otherwise.

The Bench comprising Members Utkarsha and Dr Akhedan Charan was hearing an application filed by Arti Pitaliya, a Jaipur-based manufacturer of rubber components used in irrigation systems. It held:

“yes, if rubber rings are made of hard rubber and solely used for irrigation purposes but it will not attract concessional duty if it is either made of other than hard rubber or used for general purposes.”

The applicant sought clarification on whether such rubber rings, when sold separately as parts, would attract 5% GST as components of irrigation systems or 18% GST as general rubber products.

It contended that the rubber rings are designed exclusively for sprinkler and drip irrigation systems and have no independent application. It argued that the goods fall under Heading 8424, covering mechanical appliances for spraying liquids, including irrigation systems and their parts, attracting a lower GST rate.

The jurisdictional officer, however, submitted that rubber rings fall under Heading 4016, which covers articles of vulcanised rubber and attracts 18% GST. It further stated that such items are excluded from classification as machinery parts under Chapter 84 due to the relevant Section Notes of the tariff.

The Authority noted that classification depends on the nature and use of the product. It observed that parts used solely or principally with a specific machine may be classified along with that machine, subject to whether they qualify as “parts of general use” or specific components.

Referring to the GST circular on applicable tax rates, the Bench observed that parts used solely or principally with sprinkler or drip irrigation systems may fall under the relevant machinery heading. At the same time, it clarified that items classifiable under other tariff headings would attract the rate applicable to those headings.

Accordingly, the AAR held that concessional GST is conditional and not automatic. The benefit applies only where the rubber rings are specific parts of irrigation systems, are made of hard rubber, and are used exclusively for that purpose.