TMI Blog2023 (1) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings. The rate of tax applicable on such goods depends upon the classification of the same and the effective rates of the same is specified in schedules appended to Notification no. 01/2017-CT(Rate) dated 28.6.2017 and subject to the adherence of stipulations, the applicable Rate of tax is 9% CGST + 9%SGST on goods classifiable under 8471, in terms of entry no. 360 to Schedule-Ill to Notification no. 01/2017-CT(Rate) dated 28.06.2017. In case the goods in question are classifiable under heading other than 8471 owing to it functionality as discussed, the said goods will attract rate of tax as specified in the schedules appended to Notification no. 01/2017-CT(Rate) dated 28.6.2017 on such supplies on the basis of description specified therein. - STC/AAR/06/2022 - - - Dated:- 17-8-2022 - SMT. SONAL K. MISHRA AND SHRI RAJESH KUMAR SINGH, MEMBER PROCEEDINGS [U/s 98 of the Chhattisgarh Goods Services Tax Act, 2017 (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut unit, whether or not combined'. 3. Contentions of the applicant: - About the Product - Interactive Flat Panels: 3.1 The Interactive Flat Panels ( IFP/IFPs ) are of different sizes i.e., 55 inches, 65 inches, 75 inches, 86 inches, and 98 inches also of difference models which may vary depending upon the size, year of manufacture generation. Despite having so many varieties in sizes models, the basic character of machine (IFP) remains same. Depending upon the requirement of the customer the same are sold and the features and specifications of the aforesaid goods are as follows: It comprises of LCD panels with an LED bocklight and allow multi touch interaction. It has an in-built Central Processing Unit of 1.5GHz processing speed (hereinafter referred to as the CPU ], Graphics Processing Unit Mali-651 MP4 (hereinafter referred to as the GPU'). The IFP comes with 4 GB RAM and it has an internal storage capacity of 32 GB. It has a pre-installed operating system i.e., Android 8.0. In addition, it has OPS Slot which can be used to download and operate other operating systems such as Windows/ Linux. The IFP has capability to connect wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein. The relevant Note is extracted below for easy reference; 5. (A) For the purposes of heading 8471, the expression automatic data processing machines means machine capable of: (i) storing the processing programme or programmes and at least the data immediately necessary for the execution of the programme (ii) being freely programmed in accordance with the requirements of the user; (iii) performing arithmetical computations specified by the user: and (iv) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run; 3.5 Further, HSN Explanatory Notes to CTH 3471 further elucidates on what constitutes an ADPM. The relevant portion of the Explanatory Notes are extracted below: (I) AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF Data processing is the handling of information of all kinds, in pre-established logical sequences and for a specific purpose or purposes. Automatic data processing machines are machines which, by logically interrelated operations performed in accordance with pre-established instructions (program), furnish data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he use of data media such as magnetic tapes, or by direct reading of original documents, etc. There may also be arrangements for manual input by means of keyboards or the input may be furnished directly by certain instruments (e.g., measuring instruments). The input data are converted by the input units into signals which can be used by the machine, and stored in the storage units. Part of the data and program or programs may be temporarily stored in auxiliary storage units such as those using magnetic discs, magnetic tapes, etc. But these automatic data processing machines must have a main storage capability which is directly accessible for the execution of a particular program and which has a capacity at least sufficient to store those parts of the processing and translating programs and the data immediately necessary for the current processing run. Automatic data processing machines may comprise in the same housing, the central processing unit, an input unit (e.g., a keyboard or a scanner) and an output unit (e.g., a visual display unit), or may consist of a number of interconnected separate units. In the latter case, the units form a system when it comprises at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not an ADPM. The aforesaid goods come with a pre-installed operating system i.e. Android 8.0. The said Android version is a customized operating system for the aforesaid goods. Further, they also have an OPS slot. With the use of the OPS Slot, in addition to the pre-existing android system, the user can also operate other systems such as Windows, Mac OS, Chrome, Ubuntu, Linux etc. Also, the user can, with the use of either Android or other operating systems, download and install new programmes in accordance with their need and usage. Thus, the user of the aforesaid goods may program the machine as per his/her requirement. Aforesaid goods are machines on which the user is able to load and execute a program. In other words, they are capable of executing any application/ program which is stored on its memory. Thus, they are machines which can be freely programmed in accordance with the need of the user. Thus, they satisfy the said condition (ii) to Chapter Note 5 (A). Performing Arithmetical Computations The aforesaid goods are capable of performing such arithmetical computations depending on the input as provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HP All in One PC (HP 200 Pro G4 22) Lenovo All in One PC (Idea Centre AIO) System Features Operating System Android 8.0 [Compatible with Windows OS/Chrome OS / iOS /ubuntu) Windows 10 Pro Windows 10 Pro Processor Name Dual core A73+Dual core A53/1.5GHz (HV811) Intel Core i5-10210 (1.6 GHz) Intel Core i5-10400 (3.6 GHz) Memory Memory (RAM) 4GB 8 GB DDR4 8 GB DDR4 Storage Storage 32GB 1TB 7200 rpm SATA HDD 512 GB SSD Storage Type Chip on Board HDD SSD Display and Graphics Display 75 inch 21.5 Inch 23.8 inch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP7502 Display Touch Sensitive Display- 7 inches 75 4K UHD with Fine + IR touch technology Central processing unit (CPU) to process data Processor Yes. ARM Cortex-A8 Yes. Dual core A73-t-Dual core A53/ 1.5GHz (HV811) GPU Mali- G51MP4 Random-access memory (RAM) 0.512 GB RAM 4 GB RAM WiFi Yes. 802.11a/b/g/n No Cellular Connectivity Yes No Storage 16 / 32 GB Internal Storage-Expandable using SD card 32 GB Internal Storage Weight 400 gms 61 KG Battery 5100 mAh. Rechargeable. Battery Life- 9-10 hours Power Supply AC 100 to 240V, 50 to 60 Hz Processing Functions It can process data, execute programs, and connect to the Internet via a wireless network in order to. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are classifiable under CTH 84.71. The relevant portion of the Circular has been extracted below for reference: 4. It is seen that Tablet Computers can be programmed in a variety of ways thereby qualifying as machines capable of being freely programmed in accordance with the requirements of the user, as required by Note 5 (A) (ii) to Chapter 84. It is also held that the products at issue have essentially the same functionality as a laptop. The function as an Automatic Data Processing Machine (ADP) is the main function of the product, while other functionalities of said machines are not different from the auxiliary functions that could be seen on any computer, such as desktop or laptop computers. The mobile phone calling function could be provided by the products only as a supplementary function because it could not be activated without running an operating system of the Tablet Computer , and in order to use the function a headset had to be used. The size of such machines when exceeding the dimensions mentioned in Note 8 to Chapter 84 relating to the pocket-size machines of heading 8470, is too big to be used principally for making voice calls. The tablet computers are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Bureau of Indian Standards has issued BIS Certification dated 27.11.2020 for the aforesaid goods under the description Interactive Flat Panel (Automatic Data Processing Machines) . Therein, the certificate has been issued for the aforesaid goods under the category of Automatic Data Processing Machines . 3.21 Therefore, the aforesaid goods are in fact ADPM and classifiable under CTH 84.71. Chapter Note 5(E) to Chapter 84 is not applicable 3.22 Chapter Note 5(E) to Chapter 84 provides that machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings. 3.23 that the aforesaid goods perform the specific function of data processing. In the present case, the aforesaid goods can perform the functions of a laptop or a computer. It is not a machine performing any function other than data processing. 3.24 The aforesaid goods perform an array of functions beyond mere display of content. Thus, they cannot be said to perform function which is other than data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. Further section 103 of CGST Act, 2017 stipulates about the ruling pronounced as under: - The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only - a. On the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling: b. On the concerned officer or the jurisdictional officer in respect of the applicant. Thus, in view of the above section 103 of CGST Act, 201 7, the ruling so sought by the Applicant would be binding only on the Applicant and on the concerned officer or the jurisdictional officer as stipulated above. 7. We have gone through the submissions made by the applicant and have examined the contentions raised by them. At the outset, we find that the issue raised in the application is squarely covered under Section 97(2)(a) and Section 97(2) (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification inter alia provides that Tariff item , sub-heading heading and Chapter shall mean respectively a tariff item, subheading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and further that the rules for the interpretation of the First Schedule to the Customs Tariff Act. 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. Therefore, it is implied by virtue of above explanation that the classification of goods has to be done in accordance with Customs Tariff Act 1975. However, once the heading/tariff item is arrived at, the rate of GST would be governed by above notification. The Customs Tariff Act 1975 is based on HSN. The Customs Tariff Act 1975 is amended from time to time so as to align the same with HSN Tariff developed by world customs organization. 10.2 In the aforesaid context, it is seen that Section XVI covers chapter 84 as under: - SECTION XVI MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): (iii) loudspeakers and microphones: (iv) television cameras, digital cameras and video camera recorders: (v) monitors and projectors, not incorporating television reception apparatus. (E) Machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings. 10.4 Thus from the above it follows that the much important aspect of classification of goods under scheme as envisaged under GST has to be done in accordance with Customs Tariff Act 1975, which in turn is based on Harmonised System of Nomenclature popularly known as HSN. The rules of interpretation, section notes and chapter notes as specified under Customs Tariff Act 1975 are also applicable for classification of Goods under GST. Further, once an item is classified in accordance with Customs Tariff Act 1975, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 308, 0309] All goods [other than fresh or chilled] and put up in unit container and, - (a).... bearing a registered brand name; or (b).... bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to the conditions as in the ANNEXURE] 3. ---------- ---------- 4. ---------- ---------- 5. ---------- ---------- 6 ---------- ---------- 7. 0401 Ultra High Temperature (UHT) milk 8. 0402 Milk and cream, concentrated or containing added sugar or other sweetening matter, including skimmed milk powder, milk food for babies [other than condensed milk] Schedule II -6%................... Schedule III -9% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs 8456 to 8465 including work or tool holders, self-opening die heads, dividing heads and other special attachments for the machines; tool holders for any type of tool, for working in the hand 357. 8467 Tools for working in the hand, pneumatic, hydraulic or with self-contained electric or non-electric motor 358. 8468 Machinery and apparatus for soldering, brazing or welding, whether or not capable of cutting, other than those of heading 85125; gas-operated surface tempering machines and appliances 359. 8470 Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers 360. 8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done under the description Interactive Flat panel (Automatic Data Processing Machines). This comparison of features with that of personal computer or Tablet computer to claim classification of the impugned goods under CH 8471 hardly comes to their rescue, in as much as CH 8471 pertains to Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not else where specified or included. Thus, it becomes all the more important to ascertain as to whether the impugned BenQ Interactive Flat Panel RP7502 Black 75 on being supplied / traded by the applicant downstream, owing to it being programmed in a variety of ways thereby qualifying as machines capable of being freely programmed in accordance with the requirements of the user, has changed in functionality or not. The machine being Automatic data processing machine alone would not entitle it being classifiable under CH 8471, rather for it to fall under the said CH 8471 it must not be specified elsewhere or included. Thus, the certification of the impugned goods as Automatic data processing machine by BIS in itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to Customs AAR ruling in the case of M/s. Audio Distribution House Pvt. Ltd. by the Customs Authority for Advance Rulings, Mumbai and AAR ruling in the case of M/s Next Education India (P.) Ltd., passed by AAR, Telangana. In this regard, it has already been discussed that classification of goods which in the impugned case in hand is dependent on the functionality of the machine per se cannot be generalized and ascertainment of classification of goods is much dependent on the circumstances and adherence to the conditions stipulated. Further as already discussed in the preceding para, section 103 of CGST Act, 2017 stipulates about the ruling pronounced as under: - The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only - a. On the applicant who had sought if in respect of any matter referred to in sub-section (2) of section 97 for advance ruling; b. On the concerned officer or the jurisdictional officer in respect of the applicant. Thus, in view of the above section 103 of CGST Act, 2017, the ruling given in the cited case would be binding only on the Applicant and on the concerned officer or the jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding other than 8471 owing to it functionality as discussed, the said goods will attract rate of tax as specified in the schedules appended to Notification no. 01/2017-CT(Rate) dated 28.6.2017 on such supplies on the basis of description specified therein. Having regard to the facts and circumstances of the case and discussions as above, we pass the following order: - ORDER (Under section 98 of the Chhattisgarh Goods and Services Tax Act, 2017) No. STC/AAR/06/2022 Raipur Dated 17-08-2022 The ruling so sought by M/s Savex Technologies Pvt. Ltd., E-7/8, Sector-5, Devendra Nagar, Raipur, Chhattisgarh GSTIN: 22AAACS5547H2ZH the applicant is accordingly answered as under: - RULING (a) For the product BenQ Interactive Flat Panel RP7502 Black 75 being supplied / traded by the applicant to qualify under chapter heading 84714190, it must necessarily satisfy the stipulations as mentioned in the Section note and chapter note of Section XVI and Chapter 84 respectively, as discussed herein above. In case the impugned machine consisting of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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