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2022 (7) TMI 502 - AAR - GSTLevy of GST - renting of Land - whether the activity of Fish/Prawn Farming is covered under services relating to rearing all life forms of animals- by way of renting or leasing of vacant land and eligible for GST exemption as per SI.No.54 of notification No.12/2017 central tax (Rate) dt 28.06.2017 and corresponding notification under Andhra Pradesh GST? - HELD THAT - Cultivation of plants is essentially 'agriculture' while 'rearing of all life forms of animals' is 'animal husbandry'. Animal husbandry is the branch of agriculture where animals are reared, bred and raised for commercial purposes like meat, fibre, eggs, milk and other food products. Fish farming is not an agricultural activity as no basic agricultural operation 'directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing', as enumerated in sl.no. 54 (a) is carried out on that vacant land. Furthermore, in case of fish/prawn farming, any of the processes as listed in the sl.no.54 (c) of the notification such as 'tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such other operations which do not alter the essential characteristics of agricultural produce' are not carried out on the vacant land. Hence, fish/prawn farming is not covered under services to agriculture as enumerated under SI.No.54 of the notification. The absence of explicit intention in the lease agreement for the purpose of which the land is used would negate the eligibility criterion for exemption in the instant case. Thus, essentially it is this condition of sl.no 54 (d) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 that is not meted to consider the renting activity of vacant land as services relating to rearing of all life forms of animals.
Issues Involved:
1. Applicability of GST on renting of land. 2. Eligibility of fish/prawn farming under "services relating to rearing all life forms of animals" for GST exemption. Issue-Wise Detailed Analysis: 1. Applicability of GST on Renting of Land: The applicant, M/s. Sri Vinayaka Hatcheries, sought an advance ruling on whether the renting of land for fish/prawn farming is subject to GST. The applicant argued that as per SI.No.54 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017, services related to the rearing of all life forms of animals by renting vacant land are exempt from GST. The applicant contended that fish and prawn farming should fall under this exemption. 2. Eligibility of Fish/Prawn Farming for GST Exemption: The applicant's interpretation of the law was based on the premise that fish and prawn farming qualifies as rearing of animals, which should be exempt from GST under the specified notification. They referenced the definition of "renting" in relation to immovable property and argued that the lease of land for fish/prawn farming meets the criteria for exemption. The applicant cited a similar ruling by the Kerala Authority for Advance Ruling to support their claim. Discussion and Findings: The Authority examined the specific issues and the applicant's submissions. The key points of discussion included: - Rearing of Animals: The Authority noted that the entry under Heading 9986 emphasizes services related to the cultivation of plants and rearing of animals, which includes agricultural operations and animal husbandry. However, fish farming does not involve basic agricultural operations directly related to the production of agricultural produce, as specified in the notification. - Lease Agreement Analysis: The lease agreement between the applicant and the lessor was scrutinized. Clause 10 of the agreement did not specify that the land was leased for agricultural or animal rearing purposes. The agreement was interpreted as a commercial rental without any explicit reference to fish/prawn farming. - Classification of Service: The Authority referred to Schedule II of the CGST Act, 2017, which classifies the lease of land as a supply of service. The relevant service code 9972 covers real estate services, including rental or leasing of non-residential property, which is taxable at 18%. Conclusion: The Authority concluded that the lease of vacant land for fish/prawn farming does not qualify for GST exemption under SI.No.54 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. The absence of explicit intention in the lease agreement for agricultural or animal rearing purposes negates the eligibility for exemption. Therefore, the renting activity is taxable at the rate of 18% under HSN Code 9972. Ruling: The activity of renting land for fish/prawn farming is ineligible for GST exemption as per SI.No.54 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 and is taxable at the rate of 18% under sl. No. 16 of HSN Code 9972 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.
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