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GST - Severed rubber trees are 'goods' - Tax on rubber wood is 18% under HSN 4403: AAR

Published: Apr 12, 2018

By TIOL News Service

THIRUVANANTHAPURAM, APRIL 12, 2018: THE applicant, a small scale contractor, has preferred an application for Advance Ruling on the rate of tax on standing rubber trees.

The applicant is engaged in the purchase and cutting and removal of rubber trees from the plantations of certain public sector undertakings owned by the Government of Kerala and also from private individuals in Kerala.

The applicant submits that he had participated in the e-auction for cutting 6696 standing rubber trees from the State Farming Corporation Ltd., Vettithitta, a PSU under Central Govt. That the State Farming Corporation is demanding 18% on live rubber trees.

It is the contention of the applicant that the rubber trees are softwood and cannot be used for construction purposes and are generally used for the manufacture of packing cases and plywood substitutes, etc. after necessary processing.

It is further informed that in the era of VAT since rubber wood is not useful for construction purposes, the Government of Kerala had exempted the rubber trees/rubber wood from the purview of tax.

Therefore,the questions to be determined by the Authority are -

"(1) Live rubber trees under HSN code 06 the rate of tax 0 but now insisting for payment of 18% GST which according to the auction there is no clarification issued by the GST Authorities as on date in spite of letter dtd. 19-12-2017 hence as per the W.A.No.245/2018 of Hon'ble High Court for clarifying the GST rates.

(2) Both taxable rate of CGST and SGST for Standing Rubber Trees and Firewood,"

The Authority observed –

+ As per the definition of goods in Section 2(52) of CGST Act, 2017,  ''goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply . 

+ Under the contract of supply, growing crops i.e., rubber trees are agreed to be severed before supply and hence, comes under the definition of 'goods'. Thus, standing rubber trees no longer remain as such. Therefore, it can only be treated as 'wood in rough form'.

+ In GST, firewood is exempted as per HSN Code 4401. There is no differentiation between softwood and hardwood in GST.

The AAR, therefore, ruled –

++ It is hereby clarified that rate of tax on rubber wood in the aforesaid transaction is 18% under the HSN 4403.

(See 2018-TIOL-03-AAR-GST)