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Hindustan Shipyard Limited ., In re

Date: September 29, 2024

Court: Authority for Advance Ruling

Bench: Andhra Pradesh

Type: Advance Ruling

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Subject Matter

Rectification Order: Application of reduced tax rate on inputs used for constructing warships and submarines

Summary

The case involves M/s. Hindustan Shipyard Limited (HSL), which filed a rectification application under Section 102 read with Section 97 of both the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017. This was in response to an Advance Ruling issued by the Authority for Advance Rulings (AAR) on May 17, 2024, which was received by the applicant on May 24, 2024. HSL sought clarification on two main points: 

  1. Applicability of IGST on Listed Equipment: HSL requested that the final order explicitly state that the approved list of equipment is subject to a 5% IGST rate. However, the AAR clarified that since the IGST rate is derived from the sum of CGST and SGST, such specific mention was unnecessary. Thus, HSL’s request for rectification was not accepted. 

  1. Classification of Lifeboats: HSL contested the inclusion of lifeboats as essential equipment for ships, suggesting they be classified as additional equipment instead. After reviewing the matter, the AAR agreed that while lifeboats are necessary for safety compliance, they do not constitute essential parts of a warship or submarine. Consequently, lifeboats were reclassified as additional equipment in the rectified order. 

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH

(Under Section 102 read with section 97 of Central Goods and Services Tax Act,2017 and the Andhra Pradesh Goods and Services Tax Act, 2017)

(Rectification of order under section 102 read with section 97 of Central Goods and Service Tax Act,2017 and Andhra Pradesh Goods and Services Tax Act, 2017) for the order number AAR No.08/ AP/GST/2024 Dated:17.05.2024

The present application has been filed u/s 102read with section 97of the Central Goods & Services Tax Act, 2017 and AP Goods & Services Tax Act, 2017 (hereinafter referred to CGST Act and APGST Act respectively) by M/s. Hindustan Shipyard Limited(hereinafter referred to as applicant:), registered under the AP Goods & Services Tax Act, 2017.

The applicant has been issued the ruling order vide reference no: AAR No. 08/AP/GST/2024 Dt:17-05-2024 and the same was served to the applicant on dated 24-05-2024. In response to the same, the applicant has filed a rectification application dated: 25-06-2024 and requested certain rectifications for the order as stated supra. The requested rectification is prima facie as per the apparent record. Hence, the application is admitted.

On perusal of the Original order rectification requested by the applicant is discussed hereunder:

1. Applicability of IGST on allowed list of equipment’s:

The applicant requested to rectify the final order by specifically mentioning that the approved list of equipments shall also be chargeable @ 5% (IGST 5%, CGST 2.5% and SGST 2.5%) under serial no.252 of Schedule I of Notification No.01/2017 – Integrated tax (Rate) dated 28.06.2017 and Serial No.252 of Schedule I of Notification No.01/2017 ­Central tax (Rate) dated 28.06.2017.

The contention of the applicant is examined in the light of the original order and it is to inform that, the tax rate under IGST is sum of CGST and SGST/UGST. Hence, there is no requirement to specifically mention about the rate of tax under IGST. The rate of taxes applicable under CGST/SGST will exact the rate of tax under IGST. Hence, the request of the applicant is not considered to rectify the order.

2. Exclusion of term life boats from being classified as additional equipment’s:

The applicant contended that” in the final order issued, included Lifeboats (Serial No.81 and 89 of Annexure 2A) under the list of equipments essential for a ship/vessel and qualifying as part and chargeable @5% under serial No.252 of the notifications.” And requested for rectification by removing the term “Life boats” from the mentioned paragraph on Page 19 of the final order.

The contention of the applicant has been examined in the light of the original orderand noticed that there are some additional equipments which are required to be made available on a ship as additional safety measure in compliance with certain statutory provisions. Though these are also to be compulsorily made available on a vessel and ship but cannot be taken to be parts of a ship as per general understanding but are rather additional equipments on a ship. Hence the request of the applicant for deletion of the term ” Lifeboat ” in Para no.2 of Page number 19 is not considered.

However, as per the discussions noted in personal hearing Accordingly the original order is amended in para no:2 of page no:21 and serial numbers 81 and 89 are included and these are to be considered not as essential part of a warship/submarine but additional equipment’s.

Para no. 2 of Page 21 is rectified and read as below:

“On careful examination of the items mentioned in annexure 2A, we find that except the equipment’s mentioned in SI. Nos. 25,28„60,72,73,81,89,90,97,111,117,118,119,123,( annexure 2A (i) 124 annexure 2A (ii), all other equipment’s can be considered to be an essential part of a warship/submarine without which the ship would not be complete and would not be able to function.”

Accordingly, the application is hereby “disposed off”.