Page 31 - GSTL_13th August 2020_Vol 39_Part 2

2020 ] SUPPLY OF WOOD LOGS FOR PULPING — BOARD CIRCULAR IS BOON OR A BANE J39

SUPPLY OF WOOD LOGS FOR PULPING — BOARD CIRCULAR IS BOON OR A BANE
SUPPLY OF WOOD LOGS FOR PULPING —
BOARD CIRCULAR IS BOON OR A BANE —
AN ANALYSIS
SUPPLY OF WOOD LOGS FOR PULPING — BOARD CIRCULAR IS BOON OR A BANE
By
Ramesh Chandra Jena, B.A. (Hons.), M.A. (Eco.),
D.M.M., LL.B.
ADVOCATE & TAX CONSULTANT

Wood and bamboo are the major raw materials
for the paper industry to manufacture paper and paper
board. The paper manufacturer needs various types of forest wood in logs name-
ly, Eucalyptus, teak wood in rough, Subabul wood, Sal wood, etc. use for pulp-
ing and wood pulp used in the manufacture of paper and paper board. The pa-
per manufacturer have been procuring wood in logs from the traders, who sup-
ply wood in logs on payment of applicable tax as per Tariff rates.
Classification of wood logs in the pre-GST regime
The HSN based commodity classification code for wood logs was pro-
vided in VAT Tariff under Chapter 44 and major head “Wood and Articles of
wood; wood charcoal”. For better understanding the relevant portion of VAT
Tariff is reproduced as under :

HSN Code Description of goods
1 2
4401 00 00 Fuel wood, in logs, in billets, in twigs, in faggots or in simi-
lar forms; wood in chips or particles; sawdust and wood
waste and scrap, whether or not agglomerated in logs, bri-
quettes, pellets or similar forms
Fuel wood, in billets, in twigs, in faggots or in similar
forms :
4401 10 10 In logs
4401 10 90 Other
4401 20 00 Wood in chips or particles
4401 30 00 Sawdust and wood waste and scrap, whether or not ag-
glomerated in logs, briquettes, pellets or similar forms
4402 00 00 Wood charcoal (including shell or nut charcoal), whether or
not agglomerated

As per the cited VAT tariff, the traders adopted classification (HSN 4401) for ‘wood
in logs’ for the clearance and payment of VAT as per Schedule-II with tariff rate @
5% against supplies made to paper manufacturers. There were no issues on classi-
fication and no litigation during the pre-GST regime between the department and
taxpayers for charging VAT @ 5% against supply of wood logs to paper industries
for the generation of wood pulp and thereby used wood pulp in the manufacture
of paper and paper board.
Classification of wood logs in the GST regime
In the absence of clarification on classification of ‘wood in logs’ used for
pulping during the initial period of GST implementation, the traders adopted
GST LAW TIMES  13th August 2020  31