Roof mounted air conditioning units for Railway passenger coaches would draw 28 per cent goods and services tax (GST), the appellate authority for advance rulings (AAAR) has ruled in Punjab.
The AAAR upheld an order of the Authority for Advance Rulings (AAR) in this regard.
The issue was whether the product would come under the harmonised system of nomenclature (HSN) code heading of 8415, attracting 28 per cent GST or under 8607 that draws 18 per cent GST.
Entry 8607 covers parts of railway locomotives or rolling stock and 8415 is devoted to classification of air conditioning machines.
The AAAR held that entry 8607 is general in nature, whereas entry 8415 is specific.
The appellate authority pointed out that parts under entry 8415 do not apply to machines and apparatus given under HSN code headings from 8401 to 8479.
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Sandeep Sehgal, partner tax at AKM Global, said the AAAR reiterated the fundamental rule of classification and held that the most specific description should prevail over the general description.
"The authority also mentioned that classification of supply could not be changed just because it is used with railway coaches. Functionality or usage of the product should also be an essential criteria for the classification of goods," he said.