Classification of imported fertilizers used in the manufacture of other fertilizers at 5% GST rate. - GST - States - 18/2018-19-GST

Government of Goa Department of Commercial Taxes Vikrikar Bhavan, Panaji - Goa - 403001 Ph: 0832-2229430 CCT/26-4/2017-2018/1872 email: [email protected] Dated: 20 th August, 2018 CIRCULAR (No. 18/2018-19-GST) Subject: Classification of imported fertilizer used in the manufacture of other fertilizer at 5% GST rate-reg. Reference have been received regarding a clarification as to whether simple fertilizer, 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 fertilizer (i.e. fertilizer which are cleared to be used as fertilizer). 2.1 The matter has been examined. Chapter 31 of the Customs Tariff Act, 1975 covers Fertilizer. The fertilizer are mostly used for increasing soil and land fertility, either directly, or by use in manufacturing of complex fertilizer. However, certain fertilizer and similar goods falling under this Chapter may be used for individual purposes like use of molten urea for manufacture of melamine and urea in manufacturing of urea-formaldchyde 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 fertilizer, whether directly or through the stage of an intermediate product. 3. In the GST regime, tax structure on fertilizer has been prescribed on the lines of pre-GST tax incidence. The wording of the GST notification is similar to the central excise notification except certain changes to meet the requirement of GST. These changes were necessitated as GST is applicable on the supply of goods while central excise duty was applicable on manufacture of goods. Accordingly, fertilizer falling under heading 3102, 3103, 3104 and 3105, other than those which are clearly not to be used as fertilizer, attract 5% GST [S. No. 182A to 182D of the First schedule to the notification No. 38/1/2017-Fin (R C)(1/2017-Rate) dated 30.06.2017 published in Extraordinary Official Gazette Series I no. 13 dated 30/06/2017]. However, the fertilizer items falling under the above mentioned heading, which are clearly not to be used as fertilizer attract 18% GST [S. No. 42 to 45 of the III schedule to the notification No. 38/1/2017-Fin(R C)(1/2017-Rate) dated 30.06.2017]. the intention has been to provide concessional rate of GST 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% GST. (Dipak M. Bandekar) Commissioner of State Tax, Goa Note: Similar circular will be issued under the Central Goods and Services tax Act, 2017 by Tax Research Unit, Department of Revenue, Ministry of Finance, Government of India, New Delhi, vide Circular No. 54/28/2018-GST dated 09/08/2018.