18% or 28% GST on Roof-Mounted Railway Air Conditioners: Delhi HC to Decide Soon

A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta specified that the above-mentioned AC units shall be categorised under HSN 8415 and not HSN 8607. They are hearing a petition filed by the railways and aerospace technology company StesaLIT Limited, contesting a GST Circular issued by the Union Finance Ministry in 2024.

A 28% GST is applicable on the HSN code 8415, and an 18% GST shall be levied on HSN Code 8607.

Applicant’s company counsel, under HSN Code 8607, the roof-mount AC units (RMPUS) have always been categorised with levying GST of 18% and therefore the agreements have been entered into by the applicant on the stated grounds.

The impugned circular is without jurisdiction since it takes away the authority of the Adjudicating Authority to determine the accurate classification, and is the further stand of the applicant.

The company mentioned three advance rulings issued via the Authorities for Advance Ruling in Uttar Pradesh, in Madhya Pradesh, and Himachal Pradesh, wherein RMPU of this nature have been categorised under HSN 8607 and not 8415.

On 14th February, 2020 Advance Ruling Authority, Uttar Pradesh and the Advance Ruling Authority, Himachal Pradesh on 11th April, 2022 had cited “The classification of the “Roof Mounted AC Package Unit”, manufactured as per the specific design and layout provided by the Railways and supplied to the Indian Railways only and no-where else, falls under Chapter 86.07 of the GST Tariff.”

The court, acknowledging the above, asked that the proceedings begin against the applicant company at the time of pendency of the challenge, and will be within the consequences of this petition.

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“It is made clear that the final order shall not be given effect without further orders of this Court,” the Court stated, and listed the case on May 9. The Department has been asked to submit its reply to the petition.