Page 144 - GSTL_7th May 2020_Vol 36_Part 1

102 GST LAW TIMES [ Vol. 36
• In order to produce industrial salt, the harvested salt in the form of
wet crystals is washed in the washery plant with brine to remove
insoluble matter as well as soluble impurities. The washery plant
consists of steel structures in which the applicant has to install
equipment like Belt conveyor, metallic screener, hopper, and lay the
civil foundation at different heights as per process requirement.
• After harvesting the raw salt, the remaining brine is discharged into
the circuit area and stored in the Reservoir for conversion into “bit-
tern” which is used as raw material in the manufacture of bromine.
In order to form such circuit the applicant requires “Bunds”.
“Bunds” are prepared by sub-contractor by using the material like
Soil, Terrazyme Chemical, HB Metal and LDPE film etc. The appli-
cant is paying GST on procurement of works contract services and
purchase of materials also. Without “bunds/crystallizers” activity
of manufacturing salt and bromine are not possible. Thereafter, the
Bittern is transferred through pipeline into the Bromine Plant.
• Thus “bunds”/“crystallizers” are an indispensible part of the appa-
ratus used for manufacturing salt and bromine. It is in fact impossi-
ble to manufacture salt and bromine without bunds.
5. We find that the applicant has raised the following question for the
purpose of advance ruling under Section 97 of the Central Goods and Services
Tax Act, 2017/the Gujarat Goods and Services Tax Act, 2017 (hereinafter collec-
tively referred to as “the GST Acts”) :
Whether input tax credit is admissible to the applicant under the GST
Acts in respect of bunds which are constructed and used in the manufac-
ture of salt and bromine chemicals?
6. We find that the Applicant is a private limited company engaged in
the manufacture and supply of salt and bromine chemicals. All types of salt fall
under GST HSN Code Chapter 2501, which attract nil rate (0%) of GST. Supply of
goods or services or both on which nil or 0% GST rate is applicable are called
NIL rated supply. Schedule-I of the GST Act contains the goods which are nil-
rated supply. For example, cereals, fresh fruits, and vegetables, salt, natural hon-
ey, milk, human blood etc.
6.1 However, the applicant has submitted that the salt manufactured
by them is required to be exported as per condition and undertaking given to the
Govt. while taking land on lease basis. Therefore, the manufactured salt is ‘zero-
rated supply’ u/s. 16 of the IGST Act for the applicant.
7. To appreciate the fact, it is also necessary to understand the defini-
tions of “zero-rated supplies”, “Exempt Supply” and “Non-taxable Supply” as giv-
en in GST Acts.
7.1 As per Section 16(1) of the Integrated Goods and Services Tax Act,
2017, “zero-rated supplies” means any of the following supplies of the goods or
services or both, namely :-
(a) Export of goods or services or both; or
(b) Supply of goods or services or both to a Special Economic Zone de-
veloper or a Special Economic Zone unit.
7.1.2 Section 2(78) of the Act has defined the term “Non-taxable sup-
ply” as hereunder -
GST LAW TIMES  7th May 2020  144