GST on Artificial Turf: AAR Rules on Pure Supply vs. Works Contract
GST on Artificial Turf: AAR Rules on Pure Supply vs. Works Contract
A Bengaluru-based company approached the Authority for Advance Ruling (AAR) seeking clarity on the GST classification and rate for two types of business operations involving artificial turf/artificial grass., In this matter, the applicant company sought an advance ruling on the GST classification and rate for two different business activities, namely, the pure supply of goods (artificial turf/artificial grass) and the supply and installation of these products, which they considered a works contract.
The company contended that the pure supply of goods would fall under HSN 5703, taxable at 12% GST. Whereas the supply and installation was a composite supply of works contract under SAC 995427, and therefore, taxable at 18% GST.
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Issues Raised: What is the HSN Code and GST rate applicable for the pure supply of Artificial Turf/Artificial Grass and other sports flooring, and what rate applies to supply and installation, treated as a works contract?
AAR’s Decision: The AAR ruled that artificial turf/artificial grass, when sold without installation, falls under HSN 5703 (“tufted turf of other man-made textile materials”). Accordingly, it attracts 12% GST (6% CGST + 6% SGST) under Entry 144 of Notification No. 1/2017-Central Tax (Rate), dated 28 June 2017.
While deciding upon the second activity, being the supply and installation of the same products, the AAR concluded that the supply and installation of the artificial turf is a composite supply of works contract. This service is classified under SAC Code 9954 (Construction services). The ruling states that this service is subject to an 18% GST (9% CGST and 9% SGST) under entry No. 3(xii) of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017. The ruling is based on the premise that the installation of the turf on land makes it a works contract related to an immovable property.
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