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2019 (11) TMI 1317 - AAR - GSTRate of GST - tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves - applicant purchases tobacco leaves form other dealers who have purchased them from farmers, for the purpose of trading - applicant segregates the tobacco into grades depending upon their size (width), colour /shade, length, texture of the leaf etc., and sells such graded tobacco leaf - tobacco leaves are butted and sold to other dealers - tobacco leaves re-dried without getting them threshed - tobacco leaves threshed and re-dried - tobacco threshed and re-dried on job work basis at others premises and then sells such threshed and re-dried tobacco leaves to others - tobacco leaves threshed and re-dried - tobacco threshed and re-dried on job work basis at others premises and then sells such threshed and re-dried tobacco leaves to others. HELD THAT - It is felt that the transactions of tobacco from auction platform to the supply made to the exporter are to be interpreted in the light of the relevant notifications and to decide the rate of tax accordingly. As seen from the different stages of commodity i.e., from the leaves stage to the final product (manufactured tobacco), the green leaf plucked from the plant undergoes different types of curing to reduce the level of moisture to the maximum extent for sustainability and to continue as leaf for further process. The tobacco leaf will be entitled as a commercial commodity only after drying (Curing) and normally put to trade in form of bundles. The same will be traded between the farmer and the trader and trader to trader/manufacturer and so on - The commodity tobacco leaves shall be interpreted in the light of the entry 109, Schedule- I of Notification No. 1/2017-Central Tax (Rate) and the entry no 3 inserted under the notification 4/2017 CGST (Rate) issued for liability under reverse charge mechanism and the relevant HSN code mentioned against the description of the commodity i.e., 2401. As observed from the facts, i.e process of tobacco, from the field to final product, the green leaves undergo curing process, and become eligible commercial commodity, for which the transaction takes place in between the farmer and the trader on the auction platform. Further, as per the clarification issued by The Department TRU (Tax Research Unit) vide circular F.No.322/2/2017/Dec.2017, Tobacco Leaves means leaves of tobacco as such or broken leaves Tobacco Leaves stems . It clearly expresses that the leaves as long as they do not loose their basic character as leaves , shall be considered as tobacco leaves only. In the present case the applicant purchases the dried leaves on auction platform and trades the same to other dealers or exporters and further engaged in threshing and re-drying of tobacco leaves on job work basis for other traders or manufacturers. What is the rate of GST applicable on tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves? - HELD THAT - The GST Rate of tax for the tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves is 5% as per the notification 4/2017-Central Tax (Rate), under Reverse charge . What will be the applicable rate of tax if the applicant purchases tobacco leaves from other dealers who have purchased them from farmers, for the purpose of trading? - HELD THAT - 5% (2.5% SGST 2.5%CGST) as per Sl.No.109 of schedule I Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. What will be the applicable rate of tax if the applicant segregates the tobacco into grades depending upon their size (width), colour /shade, length, texture of the leaf etc., and sells such graded tobacco leaf? - HELD THAT - 5% (2.5% SGST 2.5%CGST) as per Sl.No.109 of schedule 1 Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. What will be the applicable rate of tax if the tobacco leaves are butted and sold to other dealers? - HELD THAT - 5% (2.5% SGST 2.5%CGST) as per Sl.No.109 of schedule 1 Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. What is the applicable rate of tax if the applicant gets the tobacco leaves re-dried without getting them threshed? - HELD THAT - 5% (2.5% SGST 2.5%CGST) as per Sl.No.109 of schedule 1 Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. What will be the applicable rate of tax if the applicant gets the tobacco leaves threshed and re-dried? - HELD THAT - 28% (14% SGST 14% CGST) as per Sl.No. 13 of Schedule IV Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. What will be the applicable rate of tax if the applicant gets the tobacco threshed and re-dried on job work basis at others premises and then sells such threshed and re-dried tobacco leaves to others? - HELD THAT - 28% (14% SGST 14% CGST) as per SI.No. 13 of Schedule IV Notification No.1/2017 Central Tax (Rate), dt.28.06.2017.
Issues Involved:
1. Rate of GST on tobacco leaves procured from auction platforms or directly from farmers. 2. Rate of GST on tobacco leaves purchased from other dealers for trading. 3. Rate of GST on graded tobacco leaves. 4. Rate of GST on butted tobacco leaves. 5. Rate of GST on re-dried tobacco leaves without threshing. 6. Rate of GST on threshed and re-dried tobacco leaves. 7. Rate of GST on threshed and re-dried tobacco leaves on a job work basis. Detailed Analysis: 1. Rate of GST on Tobacco Leaves Procured from Auction Platforms or Directly from Farmers: The GST rate for tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves, is 5% under the reverse charge mechanism as per Notification No. 4/2017-Central Tax (Rate). 2. Rate of GST on Tobacco Leaves Purchased from Other Dealers for Trading: The applicable rate of GST for tobacco leaves purchased from other dealers who have procured them from farmers is 5% (2.5% SGST + 2.5% CGST) as per SI.No.109 of Schedule I Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. 3. Rate of GST on Graded Tobacco Leaves: When the applicant segregates the tobacco into grades depending upon their size, color/shade, length, texture, etc., and sells such graded tobacco leaves, the applicable rate of GST is 5% (2.5% SGST + 2.5% CGST) as per SI.No.109 of Schedule I Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. 4. Rate of GST on Butted Tobacco Leaves: For tobacco leaves that are butted and sold to other dealers, the applicable rate of GST remains 5% (2.5% SGST + 2.5% CGST) as per SI.No.109 of Schedule I Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. 5. Rate of GST on Re-dried Tobacco Leaves without Threshing: If the applicant gets the tobacco leaves re-dried without getting them threshed, the applicable rate of GST is 5% (2.5% SGST + 2.5% CGST) as per SI.No.109 of Schedule I Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. 6. Rate of GST on Threshed and Re-dried Tobacco Leaves: For tobacco leaves that are threshed and re-dried, the applicable rate of GST is 28% (14% SGST + 14% CGST) as per SI.No.13 of Schedule IV Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. 7. Rate of GST on Threshed and Re-dried Tobacco Leaves on Job Work Basis: If the applicant gets the tobacco threshed and re-dried on a job work basis at others’ premises and then sells such threshed and re-dried tobacco leaves to others, the applicable rate of GST is 28% (14% SGST + 14% CGST) as per SI.No.13 of Schedule IV Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. Conclusion: The judgment clarifies the GST rates applicable to various stages and processes of tobacco leaves and unmanufactured tobacco. The ruling emphasizes the distinction between different forms of tobacco and their respective tax liabilities under the GST regime. The comprehensive analysis provided ensures that the applicant and other stakeholders are aware of the specific tax implications for each type of transaction involving tobacco leaves.
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