AAR Denies 5% GST Benefit on Aquaculture Aerator Gear Boxes and Separately Supplied Spare Parts:

BAS-J Industries has sought a ruling from the Tamil Nadu Authority for Advance Ruling (AAR) on the classification and GST rate applicable to aerator gear boxes used in aquaculture aerator machinery.

The applicant is engaged in factory/manufacturing, wholesale business and retail business. The dispute concerned the classification of aerator gear boxes used in aquaculture aerator machinery and whether the goods and their spare parts could qualify for the concessional GST rate of 5% applicable to specified agricultural machinery.

Questions Raised

"1. The product classifiable under HSN 84368090 ("Other Agricultural Machinery") as per the First Schedule to the Customs Tariff Act, 1975 (made applicable to GST classification under Section 9 of the CGST Act read with Section 5 of the IGST Act), is covered under Entry No. 434 of Schedule-I of Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025, and accordingly attracts GST at the rate of 5% (2.5% CGST + 2.5% SGST).

2. That the Spare parts, components, and accessories used in, or supplied for growing of prawns which are essential for, or form part of, the prawn farming aerator machinery falling under HSN 84368090 ("Other Agricultural Machinery") - are also eligible to be taxed at the same rate of 5% (2.5% CGST + 2.5% SGST) in terms of the principle that parts of goods are classified and taxed in accordance with the classification of the main equipment, unless specifically excluded, thereby falling under Entry No. 434 of Schedule-I of Notification No. 9/2025-Central Tax(Rate) dated 17.09.2025."

AAR Ruling

The Tamil Nadu AAR, however, rejected the applicant's proposed classification of the aerator gear boxes under HSN 8436.

The Authority ruled that aerator gear boxes supplied by the applicant do not merit classification under HSN 8436 and therefore do not qualify for the 5% GST rate under Serial No. 434 of Schedule-I of the relevant notification.

Instead, the AAR held that the aerator gear boxes are classifiable under HSN 84834000 and would attract GST at 18%.

The Authority also ruled on the spare parts of the gear boxes when supplied separately. Such spare parts, according to the ruling, do not merit classification under HSN 8436 and therefore would not qualify for the 5% rate.

The spare parts, when supplied separately, would instead attract GST at 18% under HSN 84839000.