The Supreme Court has set aside an Allahabad high court judgement that had made it mandatory for the tendering authority to mention the relevant harmonised system of nomenclature (HSN) code in tenders so that bidders can know the right goods and services tax (GST) rate for quoting prices.
- The court said it is the bidders’ responsibility to find out the relevant HSN code. The tender relates to the supply of turbo-wheel impeller balance for which the tendering authority, Diesel Locomotive Works in Varanasi, had sought bids through Notice Inviting Tender (‘NIT’) from various vendors and provided ranks based on the price quoted by the bidders.
- With effect from the 1st April, 2021, it has been made mandatory for a GST taxpayer, having turnover of more than Rs 5 crore in the preceding financial year, to furnish 6 digits HSN Code (Harmonised System of Nomenclature Code), or as the case may be, SAC (Service Accounting Code) on the invoices issued for supplies of taxable goods and services.
- A taxpayer having turnover of upto Rs 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices.
- In Customs Tariff, HS code is prescribed as heading (4 digits HS), sub-heading (6 digits HS) and tariff items (8 digits).
About HSN Code
- The World Customs Organization developed HSN Code as a multipurpose international product nomenclature that first came into effect in 1988 with the vision of facilitating the classification of goods all over the World in a systematic manner.
- HSN is a six-digit code that classifies more than 5000 products, arranged in a legal and logical structure.
- HSN classification is widely used for taxation purposes by helping to identify the rate of tax applicable to a specific product in a country that is under review.
