1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after to be referred as “Act”) and the rules made thereunder filed by M/s. Elefo Biotech Pvt. Ltd., Plot No. 135, Khasra No. 92, Jhabreda Road, Narsan Kalan, Haridwar, Uttarakhand – 247670, seeking an advance ruling on the following :

“Recommendation on the HSN Code and applicable tax rate to be used under GST for the AMI (Anaerobic Microbial Inoculums).”

2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

3. As per the said subsection (2) of Section 97 of the Act ibid advance ruling can be sought by an applicant in respect of :

(a) Classification of any goods or services or both

(b) Applicability of a notification issued under the provisions of this Act,

(c) Determination of time and value of supply of goods or services or both,

(d) Admissibility of input tax credit of tax paid or deemed to have been paid

(e) Determination of the liability to pay tax on any goods or services or both

(f) Whether the applicant is required to be registered

(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term.

In the present case, applicant has sought advance ruling in respect of leviability of GST, if any, for the following –

“Recommendation on the HSN Code and applicable tax rate to be used under GST for the AMI (Anaerobic Microbial Inoculums).”

Therefore, with the instant application seeking classification of goods and rate of GST leviable thereon, in terms of Section 97(2)(a) & 97(2)(e) of CGST/SGST Act, 2017, the present application is hereby admitted.

4. Accordingly opportunity of personal hearing was granted to the applicant on 11.01.2019. Shri Saurabh Garg, Chartered Accountant and Shri S.P. Batla, Advocate, on behalf of the applicant, appeared for personal hearing on the said date. They submitted that the said product i.e. ‘Anaerobic Microbial Inoculums (AMI)’ is used in Bio-toilets in Railway coaches, and its alternative use is as organic manure. They also submitted documents which were taken on records.

5.1. In the present application, applicant has sought advance ruling for the classification and rate of GST applicable on supply of the products i.e. ‘Anaerobic Microbial Inoculums (AMI)’ manufactured by them.

5.2. Before going into the details of the instant question on which the ruling has been sought by the applicant, it is important to illustrate the exact nature and usage of the said products i.e. ‘Anaerobic Microbial Inoculums (AMI)’.

About AMI : Anaerobic Microbial Inoculums (AMI) /DRDO Bacteria inoculums are colony of micro-organisms that can live and grow in an environment devoid of oxygen i.e. anaerobic environment. Raw material required for producing AMI is cattle dung in which micro-organisms multiplies over a period of time.

AMI is used in Bio-toilet technology developed by DRDO : In Bio-technology, human waste is treated in a much effective way in an anaerobian environment. IT avoids use of chemicals. IT decomposes biological waste generated by humans into useable water and gases in an eco-friendly manner. It is a simple process wherein AMI bacteria feeds on human waste inside the tank and completely breaks down the fecal matter. Entire system relies on the creation and preservation of a natural purification ecosystem of biodegradation by micro-organisms in different stages. This process also acts as a preventer of water borne diseases. These bacteria inoculums or AMI are specially developed in a monitored and controlled environment.

AMI generation process : This process starts with mixing of cattle dung and seed AMI obtained from DRDO, Gwalior in a sealed tank where temperature and pH are controlled. Temperature of the tank is maintained between 18-22^oC and pH is also maintained between 6.8 – 7.4. Cattle dung is thus allowed to remain in this sealed tank for around 100 days under these controlled anaerobian environment. This process multiplies seed AMI provided by DRDO, Gwalior and hence gives us large quantities of AMI to be fed in Bio-toilets.

Indian Railways is one of the biggest users of AMI or DRDO inoculums bacteria as it is known in railways.

Alternate Use : Alternate use Of AMI is as ‘organic manure’.

Thus, we find that the product – ‘Anaerobic Microbial Inoculums (AMI) i.e. Animal Dung’ is nothing but an ‘organic manure i.e. organic fertiliser’ which is generally used in Bio-toilets set up in Railways coaches, known as “DRDO inoculums bacteria”

5.2. In this context, as per the nature and usage, we find that the products i.e. ‘Anaerobic Microbial Inoculums (AMI)’ manufactured by the applicant will be classified under HSN code 3101 of the GST Tariff Act and accordingly, to determine the rate of GST leviable on supply of the said products, the relevant portion of the HSN code 3101 of the GST Tariff Act is reproduced as under –

On going through the HSN code 3101 of the GST Tariff, we find that the products i.e. ‘Anaerobic Microbial Inoculums (AMI)’ manufactured by the applicant will be classified under sub-heading 31010099 and accordingly, the GST will be leviable @ 5% on supply of these products as on date.

RULING

In view of the above, we hold that the products i.e. Anaerobic Microbial Inoculums (AMI) will be classified under chapter sub-heading 31010099 of the heading 3101 of the GST Tariff and accordingly, the supply of these products will attract [email protected] 5% [CGST @ 2.5% + SGST @ 2.5%] as on date.