Top Stories AAR and AAAR Weekly Round Up Read on to know the recent AAR and AAAR matters covered at taxscan.in. By Avinash Kurungot – On January 19, 2025 12:25 pm – 7 mins read This round-up analytically summarises the key stories related to the Goods and Services Tax Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR) reported at Taxscan.in during the period from November 23, 2024 to January 18, 2025. Slaked lime Containing Less than 98% of Calcium Oxide and Calcium Hydroxide Classifiable as Slaked Lime: AAR In Re: M/s BALVEER SINGH CITATION: 2024 TAXSCAN (AAR) 234 The Rajasthan Authority For Advance Ruling ( AAR ) held that slaked lime containing less than 98% of calcium oxide and calcium hydroxide classifiable as slaked lime. The authority ruled that classification and HSN for supply of slaked lime manufactured by the applicant containing less than approximately 98% of the calcium oxide/hydroxide is classifiable under CTH 2522 20 00.

The AAR held that classification and HSN for supply of slaked lime manufactured by the applicant containing less than approximately 98% of the calcium oxide/hydroxide is classifiable under CTH 2522 20 00.Further held that the rate of tax of the subject goods is at 2.5% CGST and 2.5% SGST as per entry Sl. No. 131 of Schedule I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 as amended. 1.5% GST Applicable to Service of Construction of Affordable Residential Apartment under REP: AAR In Re: M/s Castle Realtors CITATION: 2024 TAXSCAN (AAR) 235 In a significant case, the Authority for Advance Ruling ( AAR ) has held that 1.5% Goods and Services Tax ( GST ) applicable to service of construction of affordable residential apartment under Real Estate Project (REP). The authority comprising Mahipal Singh, Additional Commissioner ( Member (Central Tax)) and Mahesh Kumar Gowla, (Additional Commissioner, Member (State Tax)) held that services provided by the applicant falls under Notification No. 03/2019 CT (rate) dated 29thMarch, 2019.

The applicant is liable to pay GST at the rate of 1.5% [0.75% CGST + 0.75% SGST] in respect of the services of construction of affordable residential apartments under Real Estate Project (REP) as per entry at Item (ic) and at the rate of 7.5% [3.75% – CGST + 3.75% – SGST] in respect of the services of construction of residential apartments other than affordable residential apartments under REP as per entry at Item No. (id) of Notification No. 3/2019-Central Tax (Rate), dated 29-3-2019 subject to the conditions prescribed under the respective entries. Standalone Supply of Food to Patients not Composite Supply, no Exemption applicable under GST: AAR In Re: BAMAPADA JANA CITATION:2025 TAXSCAN (AAR) 101 In a significant ruling, the West Bengal Authority for Advance Ruling (AAR) has clarified that the standalone supply of food to in-patients by a catering contractor does not qualify for exemption under the Goods and Services Tax (GST). In its detailed analysis, the AAR Bench of Dr. Tanisha Dutta and Joyjit Banik noted that the applicant’s role was limited to preparing and delivering food based on dietary instructions provided by the hospital. This activity does not qualify as “healthcare services” as defined in the GST Act.

The AAR further differentiated this case from other rulings, such as those involving multi-specialty hospitals, where the food supply was deemed ancillary to healthcare services. In contrast, the applicant in this case operates purely as a caterer and does not engage in providing any healthcare services. ‘Cream’ prepared using Vegetable Oil and not Animal Fat, Subject to 5% GST: AAAR In Re: M/s S.S. Traders CITATION: 2024 TAXSCAN (AAAR) 114 The Uttar Pradesh State Appellate Authority for Advance Ruling ( AAAR ) recently ruled that the manufacture of ‘cream’ to be used in food or cake preparation shall attract 5% Goods and Services Tax ( GST ) observing that the proposed product contains 23% vegetable fat and zero amount of dairy fat. Affirming that addition of sugar does not change the character of the impugned product, AAAR ruled that the AAR had erred in classifying the proposed ‘cream’ under Chapter Heading 2106 90 99 since Chapter 21 covers Miscellaneous Edible Preparations that are not specified elsewhere or included. Rejected Paddy used for Animal Feed, Cattle Feed etc. classified under HSN Code 1006 10 90: AAAR In Re: M/S Dongarmal Jain CITATION: 2025 TAXSCAN (AAAR) 101 The Appellate Authority for Advance Ruling ( AAAR ), Chhattisgarh recently affirmed that rejected paddy used for animal feed, cattle feed, poultry feed, manure and industrial use are to be classified under Harmonized System of Nomenclature ( HSN ) Code 1006 10 90.

The two-member Bench of Chandra Prakash Goyal and Rajat Bansal disagreed with the ruling of the AAR in classifying rejected paddy under HSN 1006 10 (Rice in the husk) as rejected paddy is completely unfit for human consumption and would warrant a separate classification. The Bench further clarified that rejected paddy shall be rightly placed under HSN 1006 10 90 but refrained from commenting on its taxability owing to lack of further details regarding the proposed industrial usage of the rejected paddy seed. Sale of used Lead Acid Batteries, Plastic Waste and Metal Scrap not Bound by Margin Scheme u/r 32(5) CGST Rules: AAAR In Re: M/s. Hitesh Gwalani CITATION: 2025 TAXSCAN (AAAR) 102 The Rajasthan Appellate Authority for Advance Ruling ( AAAR ) has clarified that the Margin Scheme as envisioned under Rule 35(5) of the Central Goods and Services Tax ( CGST ) Rules, 2017 shall be applicable on the sale of used lead acid batteries, plastic waste and scrap from aluminium, steel, copper and brass utensils.

The two-member Bench of Mahendra Ranga, Member (Central Tax) and Ravi Kumar Surpur, Member (State Tax) observed that the Appellant’s claim of second-hand goods owing to purchase from unregistered suppliers and subsequent sale without any process is not tenable. Citing an example of a used car, the Bench held that ‘a second hand car shall be used in the same way as a new car. Thus mere change of ownership is not sufficient to term them as second hand goods under the purview of Rule 32(5) of the CGST Rules, 2017’. No GST Exemption on ‘Abhivahan Permission Shulk’ paid to Forest Department for Clearance of Mined Coal: AAAR In Re: M/s. Chhattisgarh State Power Generation Co.Ltd CITATION: 2025 TAXSCAN (AAAR) 103 The Chhattisgarh Appellate Authority for Advance Ruling ( AAAR ) in a blow to the Chhattisgarh State Power General Co. Ltd. ( CSPGCL ) ruled that no Goods and Services Tax ( GST ) exemption may be provided on ‘Abhivahan Permission Shulk’ paid by them to the Forest Department for the issuance of transit pass of mined coal.

The two-member Bench of Chandra Prakash Goyal and Rajat Bansal observed that the permit charges collected by the forest department is used by them to oversee the mining activity and not related to any of the tenets of urban forestry and protection of the environment under Articles 243G and 243W of the Constitution of India. Matters being so, the same were deemed not eligible for NIL rate of GST, as provided under Sl. No. 4 and 5 of Notification No.12/2017-Central Tax (Rate). Demo Motor Vehicles not eligible for GST ITC on Inward Supply: AAAR Shuns Maruti, Bajaj, KTM & Chetak Dealership In Re: M/s Sai Service Private Limited CITATION: 2025 TAXSCAN (AAAR) 104 The Appellate Authority for Advance Ruling ( AAAR ), Goa recently dispelled the claim of Input Tax Credit ( ITC ) on motor vehicles maintained exclusively for demonstration purposes by vehicle dealerships.

The two-member Bench of Sarpreet Singh Gill, Commissioner of State Tax and Mayank Kumar, Chief Commissioner Central Tax and Customs observed that demo motor vehicles are supplied at a discounted rate and are categorized separately by the Original Equipment Manufacturer (OEM). Furthermore, referring to the decision of the Haryana Appellate Authority for Advance Ruling in the case of M/s Platinum Moto Corp LLP, wherein it was held that “in the very first demonstration run, demo car loses the character of the new motor vehicle and demo vehicles is sold akin to second hand goods and which is different from new vehicle and accordingly treated differently under GST law, so the demo car is not an input”.

GST Applicable on Additional Surcharge Levied by Electricity Supplier on OA Consumer: AAAR In Re: M/s M/s Chamundeswari Electricity Supply Corporation Limited CITATION: 2025 TAXSCAN (AAAR) 105 The Karnataka Appellate Authority for Advance Ruling ( AAAR ) recently affirmed the applicability of Goods and Services Tax ( GST ) on additional surcharges paid by Open Access ( OA ) Consumers towards majorly government owned electricity suppliers. The two-member Bench of Pramod Kumar Agrawal and Shikha C observed that the additional surcharge levied under the Electricity Act from customers sourcing electricity from OA Consumers, over and above the consideration for supply and distribution of electricity is indeed taxable in terms of Section 15 of the Central Goods and Services Tax Act, 2017 ( CGST Act ), thereby subject to GST.

Suzlon’s Specially Designed Transformers for Wind Operated Electricity Generators attracts 18% GST: AAAR In Re: M/s Suzlon Energy Ltd CITATION: 2025 TAXSCAN (AAAR) 106 As per the ruling by the Gujarat Appellate Authority of Advance Ruling (AAAR), Suzlon’s specially built transformers for wind-operated electricity generators that are intended to serve as both step-down and step-up devices are subject to 18% Goods and Service Tax (GST). The Authority of Advance Ruling (AAR) ruled that the specially designed transformers for WOG, which execute the dual function of step down and step up, supplied by the appellant-assessee are not a part of Wind Operated Electricity Generators (WOEG) and, as a result, would not be eligible for the benefit of Sr. No. 234 and Sr. No. 201A of exemption notification No. 1/2017-CT (Rate), as amended. The bench of Rajeev Topno and B V Siva Naga Kumari rejected the appeal filed by the appellant Suzlon Energy and upheld the AAR’s ruling.

No GST ITC on Services Procured by Port for Operation and Maintenance of Diving Support Vehicle: AAAR In Re: M/s M/s. Sikka Ports & Terminals Limited CITATION: 2025 TAXSCAN (AAAR) 107 The Gujarat Appellate Authority of Advance Ruling ( AAAR ) recently decided that services purchased by the port for the operation and maintenance of diving support vehicles (DSV) are not eligible for the Input Tax Credit (ITC) under the Goods and Service Tax ( GST ). The department’s application against the Authority of Advance Ruling (AAR) ruling, which held that M/s Sikka is entitled to receive ITC on the services purchased for the operation and maintenance of DSVs: Relsagar & Reldarshan, has been granted by the two-member bench of Rajeev Topno and B V Siva Naga Kumari. For services acquired for the operation and upkeep of SPVs Eagle, Chetak, Calypso Fortune, and ML Noorani, M/s Sikka is eligible to receive ITC.

Regarding the renting of a vessel [SPV], the AAAR determined that the ITC is barred under section 17(5) when the respondent’s contractor has discharged GST under SAC codes 996602 and 996609. Herbal Cigarettes not Medicinal, 28% GST leviable: AAAR M/S Aorom Herboteckh CITATION: 2025 TAXSCAN (AAAR) 108 The Gujarat Bench of the Goods and Services Tax ( GST ) Appellate Authority for Advance Ruling ( AAAR ) has upheld a ruling classifying herbal cigarettes under HSN 24029010, levying 28% GST along with compensation cess.

The authority bench of Central GST Member B V Siva Naga Kumari and State GST Member Rajeev Topno noted that, the herbal cigarettes are non-medicinal and are subject to the maximum GST rate of 28%, coupled with compensation cess. It was observed that, “What this re-confirms is what was stated during the course of personal hearing – that the appellant does not hold any license for manufacture of Ayurvedic medicine from any Regulatory Body, permitting them to manufacture the said goods, which as per their claim is a medicine. No GST liability on Emcure for Free Employee Bus Transportation: AAAR The Assistant Commissioner vs Emcure Pharmaceuticals Ltd CITATION: 2025 TAXSCAN (AAAR) 109 The Gujarat Appellate Authority for Advance Ruling ( AAAR ) has affirmed that Emcure Pharmaceuticals Limited is not required to pay Goods and Services Tax ( GST ) on free bus transportation provided to its employees. The AAAR rejected the department’s appeal, maintaining that GST is not applicable to the portion of canteen charges recovered from employees by M/s. Emcure and remitted to the canteen service provider. Furthermore, it confirmed that GST is not chargeable on the free bus transportation facility offered to employees. However, the bench clarified that Input Tax Credit (ITC) on GST paid for canteen services is inadmissible under Section 17(5)(b)(i) of the CGST Act. ITC is, however, permissible for GST paid on the hire of buses with an approved seating capacity exceeding 13 persons, used for employee transportation.