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2018 (7) TMI 967 - AAR - GSTChargeability of tax/GST - Classification of goods - support services of loading, unloading, packaging, storage or warehousing of agriculture produce - goods which comes for storage (Group A to Group G of Annexure A) - whether agricultural produce or not? - rate of GST - Cold Storage services - N/N. 11/2017 Central tax (Rate) dated 28/06/2017 and N/N. 12 2017 -Central lax (Rate) dated 28/06/2017. Whether the goods as mentioned in Group A to Group G of Annexure A which comes for storage will come under the definition of agricultural produce or not? - Whether the supply of Cold Storage services by the applicant firm to the goods as mentioned above in the table as Group A to Group G. attracts Nil rate of duty or not as per N/N. 11/2017 Central tax (Rate) dated 28/06/20172017 and N/N. 12 2017 -Central lax (Rate) dated 28/06/2017? Held that - As per N/N. 12/2017 Central tax (Rate) dated 28/06/2017, Sr. No. 54 in the table therein, Central tax on the intra-State supply of services of description Support services to agriculture, forestry, fishing, animal husbandry is exempt - Once the products attains its first marketability for the primary market all other subsequent processes on produce leading to value addition and subsequent sale belong to the realm of secondary market thereon refraining the produce to fall under the category of Agricultural Produce as defined in Notification. Goods as per annexure A (Group A to G) are discussed as follows - Annexure A (Group A) - Fennel(Saunf), Coriander(Dhaniya), Cumin Seeds (Jeera), Carom Seeds(Ajwain) ,Fenugreek Seeds(Kasoori Methi),Mustard Seeds(Sarson),Bn)vvn Mustard Seeds (Rai),.Nigella Seeds(Kalonji),Poppy Seeds(Posara Dana) - Held that - If no further processing is done on above mentioned goods or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes marketable for primary market .then the same would fall in the definition of agricultural produce given in aforesaid Notification and exemption would be available. Annexure A (Group B) - Turmeric (Haldi), Dried Ginger (Sonth) - Held that - Processed goods mentioned in Group B do not belong to produce which are being sold in primary market and processes involved lead to considerable value addition indicating change in essential characteristics - goods mentioned in Group B do not fall under the definition of Agricultural Produce . Annexure A (Group C) - Tamarind - Held that - Tamarind when harvested from tree consists of brittle outer shell which encapsulates the pulp and enclosed seed which in turn are sold by farmer in primary market. Shelling and removal of seeds to obtain the pulp is usually done by specially designed machines. Hence inner pulp without shell and seeds do not fall under the definition of Agricultural Produce as it loses its essential characteristics. Annexure A (Group D) - Dry mango ( Sukha Amchur) - Held that - Green/raw mango, green kathodi. kachha amla. gila Singhada. hara Matar arc harvested by farmer fresh and brought to primary market(mandis) from where its bought by traders/processors who intern under take certain specific processes such as washing , cutting, shelling, cleaning, drying, packing etc. These processes lead to a considerable value addition as compared to that of product sold in primary market which is in itself reflection of change in there essential characteristic hence the above cannot be characterized as Agricultural produce. Annexure A (Group E) - Cinnamon (Dalchini), Gum (Gond), Arjuna Chaal ( Arjun Chaal) - Held that - In all these goods, some processing is done to make it fit for consumption - Hence as per definition they too don t fall under the category of Agricultural Produce. Annexure A (Group F) - Groundnuts (Mungfalli), Coconut (Copra Gola) - Held that - In both the cases farmers are not usually involved in processing of product. Thus groundnuts without shell commonly called as Singhdana (ground mil seeds) and coconut without shell known as Copra gola do not fall into catogary of Agricultural Produce. Anncxure A(Groun G) - Dry fruits such as Fig ( Anjeer) Almond (Badaam), Walnuts ( Akhrot), Pistchio ( Pista), Lotus Seed Pop (Phool/Tal Makhana) etc. - Held that - Products mentioned in Group G are processed by which the loose their essential characteristics - Hence do not fall under category of Agricultural Produce. Ruling - Goods mentioned under Group A fall under the definition of Agricultural Produce in terms of the aforesaid notification and so supply of cold storage service in relation to these is exempt from the levy of GST . However if any processing is done on these products as is not usually done by a cultivator or producer at farm level , then these would fall outside the definition of agricultural produce as given in the aforesaid Notification and in that cast-supply of cold storage service in relation to these would remain chargeable to GST. Goods mentioned under Group B to G are not Agricultural produce in terms of the aforesaid notification and so the supply of cold storage service in relation to these would remain chargeable to GST.
Issues Involved:
1. Whether the goods mentioned in Group A to Group G fall under the definition of agricultural produce. 2. Whether the supply of cold storage services to these goods attracts a NIL rate of duty as per Notification No. 11/2017 Central Tax (Rate) dated 28/06/2017 and Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017. Issue-Wise Detailed Analysis: Issue 1: Definition of Agricultural Produce - Group A (Fennel, Coriander, Cumin Seeds, etc.): If no further processing is done or such processing is done as usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for the primary market, then these goods fall under the definition of agricultural produce. However, if specialized processing is done (e.g., cleaning, sorting, grading using machines), they fall outside this definition. - Group B (Turmeric, Dried Ginger, Dates, Dry Dates): These goods undergo specialized processes like drying and polishing, not usually done by cultivators, which change their essential characteristics. Hence, they do not fall under the definition of agricultural produce. - Group C (Tamarind): The removal of shells and seeds, usually done by machines, changes the essential characteristics of tamarind. Thus, it does not fall under the definition of agricultural produce. - Group D (Dry Mango, Kathodi, Dry Gooseberry, Dry Water Caltrop, Dry Peas): These products undergo specific processes such as washing, cutting, drying, which lead to considerable value addition and change their essential characteristics. Therefore, they do not fall under the definition of agricultural produce. - Group E (Cinnamon, Gum, Arjuna Chhal): These products undergo specific processes like hammering, scrapping, drying, cleaning, and refining, which are not done by farmers. Thus, they do not fall under the definition of agricultural produce. - Group F (Groundnuts, Coconut): The removal of outer shells using machines changes the essential characteristics of these products. Hence, they do not fall under the definition of agricultural produce. - Group G (Dry Fruits such as Fig, Almond, Walnuts, Pistachio, Lotus Seeds): These products undergo processes like cleaning, deshelling, drying, which change their essential characteristics. Therefore, they do not fall under the definition of agricultural produce. Issue 2: Taxability of Cold Storage Services - Group A: The supply of cold storage services to these goods is exempt from GST if no specialized processing is done. If specialized processing is done, they fall outside the definition of agricultural produce, and the supply of cold storage services would be chargeable to GST. - Groups B to G: The goods do not fall under the definition of agricultural produce. Therefore, the supply of cold storage services to these goods remains chargeable to GST. Ruling: 1. Goods in Group A fall under the definition of agricultural produce if no specialized processing is done, and the supply of cold storage services is exempt from GST. If specialized processing is done, they fall outside this definition, and the supply of cold storage services is chargeable to GST. 2. Goods in Groups B to G do not fall under the definition of agricultural produce, and the supply of cold storage services to these goods is chargeable to GST.
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