Railway Parts’ Manufacturing & Supplying will Attract 12% GST Rate

On July 30, 2020, the Authority for Advance Ruling, Karnataka (AAR) put forward a ruling in which it stated that Good and Service Tax (GST) at 12% rate Grab the information of revised GST slab rates on consumer products in India, Although GST council finalized the slab rates like 5%, 12%, 18% and 28% will be applicable on manufacturing and supply of the Railway parts including but not limited to the knuckle, toggle, lock, yoke, etc.

The AAR Karnatka Authority consisted of Dr. Ravi Prasad M.P., Additional Commissioner of Commercial tax, member of State Tax, and Mashoodur Rehman Farooqui Joint Commissioner of Central Tax come up with this ruling in a matter where M/s Pragati Steel Casting Pvt. Ltd. is the applicant. The Applicant is involved in the manufacturing and supply of various steel casting, valves, automobile parts, etc.

The Applicant M/s Pragati Steel Casting Pvt. Ltd. is supplying the parts to M/s Sanrok Enterprises, Faridabad. Who placed the order for the supply of the said goods after obtaining the orders from Indian Railways. Thus, as per the provided details, the goods are finally reaching Indian Railways classifying the said goods under HSN 8607 & on discharging the GST at 5% and no other customers can use the same.

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However, as per the mentioned details in the order letter Applicant believes that the impugned goods classified under HSN 7325 and hence attract a GST rate of 18%. Hence the Applicant filed the application seeking an advance ruling in this matter with a question that whether manufactured railway parts such as Couplers, Locks, Knuckle, Toggle, Yoke, etc., supplied to the Sanrok Enterprises, that will further supply to the Indian Railways after assembly will be classified under HSN 8607 or under HSN 7325.

The Authority while going through the application said that the GST rate applicable on the impugned goods is 5% in terms of entry number 241 of Schedule I to the Notification No.1/2017-Central Tax (Rate) dated June 28, 2017, till October 29, 2019, which is now replaced by entry number 205 G of Schedule II and now the rate of GST is 12%, with no refund of unutilized input tax credit (ITC) A complete guide for understanding the basics of input tax credit and it calculation with detailed examples under GST (Goods and Services Tax) India.