Supply of un-assembled parts and components to railways are not classifiable under Chapter 86 for lower rate of GST

Last updated: 16 February 2021

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The Haryana AAR has ruled that unassembled railway coach components, supplied from one unit to another for final assembly and fabrication, cannot be classified under Chapter 86 for a lower GST rate of 5%. Instead, these parts will attract the general GST rate applicable to their individual classifications. This decision clarifies that the process in Chennai, involving assembly and the addition of other components, constitutes manufacturing, thus disqualifying the supply from the special rate intended for complete assemblies.

Court :
Hon'ble AAR Haryana

Brief :
The Hon’ble AAR Haryana in M/s. JSL India Private Limited [Advance Ruling No. HAR/HAAR/R/2018-19/51 decided on April 24, 2019] held that supply of un-assembled rail coach from one unit to another unit where these goods would be assembled together (including fabrication and adding components) to form complete assemblies cannot be classified under Chapter 86 of Notification No. 1/2017-Central Tax(Rate), dated June 28, 2017 ('Goods Rate Notification') to attract GST @ 5% and rather, they would attract the general applicable rate of duties as per the classification of each item in their respective chapters.

Citation :
Advance Ruling No. HAR/HAAR/R/2018-19/51 decided on April 24, 2019

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