AAR Classifies Paddle Wheel Aerators Used in Aquaculture Under 18% GST Bracket

The applicant, Sagar Aqua Culture Private Limited, is a manufacturer and seller of “Paddle Wheel Aerators” and their parts. These machines are used exclusively in aquaculture like shrimp and fish farming, to increase dissolved oxygen levels in water. The applicant sought an advance ruling to determine the correct GST classification and rate for these aerators.

They argued that the product should be classified under HSN 8436 as “agricultural, horticultural, forestry, poultry-keeping, or bee-keeping machinery,” which attracts a lower GST rate of 12%. Their contention was based on the premise that aquaculture is akin to agriculture.

Main Issue: Whether “Paddle Wheel Aerators” used in aquaculture should be classified under HSN 8436 & taxable at 12% as agricultural machinery taxable at 18% as mechanical appliances with individual functions not specified elsewhere.

AAR’s Ruling: The Authority for Advance Ruling (AAR) ruled against the applicant’s proposed classification under HSN 8436. The Authority observed that the HSN 8436 specifically covers machinery for agriculture, horticulture, forestry, poultry-keeping, or bee-keeping, and aquaculture is not explicitly mentioned in this heading or the relevant Explanatory Notes.

The AAR noted that while aquaculture is related to the primary sector, the Customs Tariff Act and GST notifications maintain a distinction between “agriculture” and “aquaculture” for the purpose of HSN classification. Thus, the Authority held that the “Paddle Wheel Aerators” are more appropriately classified under HSN 8479, which acts as a residuary heading for machines with individual functions. Therefore, the product is liable to GST at the rate of 18% (9% CGST and 9% SGST).

To Read Full Judgment, Download PDF Given Below