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2019 (11) TMI 1318 - 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. GST rate on tobacco leaves procured from farmers or auction platforms. 2. GST rate on tobacco leaves purchased from other dealers. 3. GST rate on graded tobacco leaves. 4. GST rate on butted tobacco leaves. 5. GST rate on re-dried tobacco leaves. 6. GST rate on threshed and re-dried tobacco leaves. 7. GST rate on threshed and re-dried tobacco leaves processed on a job work basis. Issue-wise Detailed Analysis: 1. GST rate on tobacco leaves procured from farmers or auction platforms: The GST rate applicable on 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. GST rate on tobacco leaves purchased from other dealers: 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, 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. GST rate on graded tobacco leaves: The GST rate applicable if the applicant segregates the tobacco into grades depending upon their size, color/shade, length, texture of the leaf, etc., and sells such graded tobacco leaf, 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. GST rate on butted tobacco leaves: The GST rate applicable if the tobacco leaves are butted and sold to other dealers 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. 5. GST rate on re-dried tobacco leaves: The GST rate applicable if the applicant gets the tobacco leaves re-dried without getting them threshed 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. GST rate on threshed and re-dried tobacco leaves: The GST rate applicable if the applicant gets the tobacco leaves threshed and re-dried 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. GST rate on threshed and re-dried tobacco leaves processed on a job work basis: The GST rate applicable 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 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. Discussion and Findings: The taxability, classification, and applicable rate of tax for the goods supplied are governed under the provisions of the respective GST Acts. The applicant's activities include purchasing cured tobacco leaves, trading them, and engaging in threshing and re-drying. The ruling interprets the transactions of tobacco from auction platforms to the supply made to exporters in light of relevant notifications. The term "tobacco leaves" includes leaves as such or broken leaves or tobacco leaf stems, maintaining their basic character as leaves. Ruling: 1. 5% GST under reverse charge for tobacco leaves procured from auction platforms or directly from farmers. 2. 5% GST for tobacco leaves purchased from other dealers. 3. 5% GST for graded tobacco leaves. 4. 5% GST for butted tobacco leaves. 5. 5% GST for re-dried tobacco leaves. 6. 28% GST for threshed and re-dried tobacco leaves. 7. 28% GST for threshed and re-dried tobacco leaves processed on a job work basis. The judgment clarifies the GST rates for various stages of processing and trading tobacco leaves, ensuring compliance with the relevant GST notifications and provisions.
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