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2019 (8) TMI 1287 - AAAR - GSTBenefit of the exemption from GST - sensitizing farmers/ entrepreneurs; training students/ academia; undertaking testing for pathogens, quality of farms; supply of fish seeds; artemia Cyst(processed) for fish feed; etc.. - it is contended that the authorities below have not properly taken into consideration and extended to them the benefit of the exemption - challenge to AAR decision - Condonation of delay of 13 days in filing appeal - HELD THAT - considering the fact that the appellant is a registered society by MPEDA, an autonomous body created by an Act of Parliament and following the decision of Hon ble S.C. in the case of INDIAN OIL CORPORATION LTD. VERSUS SUBRATA BORAH CHOWLEK 2010 (11) TMI 857 - SUPREME COURT we condone the delay and take the appeal for consideration. The activities undertaken by the appellant is of diverse nature ranging from sensitizing farmers/ entrepreneurs; training students/ academia; undertaking testing for pathogens, quality of farms; supply of fish seeds; artemia Cyst(processed) for fish feed; etc.. - The exemption provided at Sl.No. 1 of Notification No. 12/2017-C.T.(Rate) exempts payment of GST only in respect of services provided by way of Charitable activities relating to Preservation of environment including watershed, forests and wildlife (entry related to the proceedings in hand) and the construction of the exemption is not to provide exemption to all the activities undertaken by an entity registered under Section 12A of the Income tax Act, which is involved in activities relating to Preservation of environment . The appellant who are the R D arm of MPEDA, whose mission is to undertake research, give consultancy and technical services to the farmers, entrepreneurs, and scale up the technologies developed, etc. after assuring the commercial viability of aqua products undertakes various activities to attain the aim of the society. By the construction of the exemption, it is clear and unambiguous that the exemption, is applicable only to Services relating to Preservation of environment when provided by an entity registered under Section 12AA of Income Tax Act and not to the entire activities of such entity - the appellant as an entity in entirety is not exempted from payment of GST or in other words, the exemption under Sl.No. 1 of Notification No. 12/2017 -C. T. (Rate) dated 28.06.2017 is not applicable to all the supplies made by the appellant and therefore the appellant is required to get registered under GST Laws subject to them making taxable supplies and other conditions Spelt under Section 23 of GST Acts. Whether the Research and development activities imported by the appellant is covered under agricultural extension service-SAC 9986 and exempted vide Entry No. 54 of Notification No. 12/2017 -C. T. (Rate) dated 28.06.2017 as amended - HELD THAT - It is stated that R D activities of RGCA entering into/ engaging experts/ consultants outside India who are having either Techn010U or experience in the field of Aquaculture to set up Aquaculture facilities in line with objectives of RGCA to disseminate such Techn010U throughout India. These engagements are in the nature of collaborative Agreements to bring best Technology available in any part of world of Aquaculture - By the definition, it is evident that only application of scientific research and knowledge to agricultural practices through farmer education or training is considered as agricultural extension service and exempted vide the said entry. Research and development imported by the appellant are technology development for breeding and farming of new/ alternative species with high commercial value Viz. fish, prawn, shrimp, crab etc. SAC 998114 covers the activities. They do not involve farmer education and training. As given in the preface of the Explanatory notes, more specific description to be preferred to general one. The R D imported by the appellant are of those detailed under this SAC. Therefore, their activities are not covered under the Entry No. 54 of Notfn. No. 12/2017 which covers Support services to agriculture, hunting, forestry, fishing, mining. SAC-9986 . Whether the testing services undertaken by them are agricultural extension services considering that the testing services ultimately result in imparting knowledge to the farmers rearing or cultivating the shrimp or prawns and therefore exempted vide Entry No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended? - HELD THAT - Testing activities undertaken by the appellant definitely do not fall under the agricultural extension service as the same as per definition in the notification is limited to application of research and knowledge through farmer education or training, whereas the testing done by the appellant does not involve farmer education or training. The testing done by them is a service to the farmers for a consideration. Whether the training activities undertaken by RGCA to students, academia who are not directly involved in rearing of fish, aquaculture etc. are covered under SAC 9992 and liable to GST as held by the Original Authority and these are also not Agricultural extension Services and therefore exempted vide Entry No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended? - HELD THAT - In the case at hand, it is not disputed that the training extended by the appellant to student, academia, etc for a charge, is the activity of training / imparting the skill in aquaculture. The entire spectra of Education (Primary, Secondary, Higher), Specialized education, Other education and training services are covered under SAC 9992. Even if the activity of the appellant is considered as not covered under the specific heading 999293-Commercial Training and Coaching the activity, is still classifiable under the same heading 9992 in SAC 999294 as other Education and Training Service nowhere else classified and the supply is taxable to GST at the appropriate rates - the rate of tax ruled by the Original authority on the activity of training extended to student, academia, etc by the appellant to be covered under the SAC 9992 and taxable at 9% CGST under Sl no 30 of Notification No 11/2017 dt 28.06.2017 as amended and 9% SGST under Sl no 30 of Notification No. II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended holds and do not need any interference. Classification of Artemia Cyst - whether classified under CTH 0511 or under CTH 2309 or CTH 03? - HELD THAT - In the instant case the product though a crustacean, is not fit for human consumption therefore do not fall under this CTH, as per the description of the tariff heading - To be classified under CTH 2309, the product should not be specified elsewhere, should be obtained by processing animal materials to such an extent that the essential characteristics of the original material is lost in the processing. From the note furnished, it is seen that artemia biomass the product supplied by the appellant when incubated in seawater with light and aeration tiny artemia Nauplii comes out from cyst which is the feed for fish. In the process of transformation of artemia cyst/ biomass to artemia Nauplii, the essential characteristics of the original material is not lost in as much as the frozen embryo is hatched in hatcheries under certain conditions to have live nauplii, the feed. Following the chapter note as above, the artemia cyst/ biomass is not classifiable under CTH 2309. The ruling of Advance Ruling authority upheld.
Issues Involved:
1. Requirement for RGCA to register under GST laws considering their transactions and exemption notifications. 2. Applicability of compulsory registration under Section 24 of the GST Act. 3. Need for separate GST registrations in different states where RGCA operates. 4. Applicable tax rates on RGCA's transactions. 5. Documentation required for interstate purchases by RGCA's branches. Detailed Analysis: 1. Requirement for RGCA to Register under GST Laws: The appellant, RGCA, argued that their activities should be exempt from GST due to their registration under Section 12AA of the Income Tax Act and their non-profit nature. However, the appellate authority upheld the original ruling that RGCA is liable for GST registration under Section 22 of the CGST and TNGST Act. The authority emphasized that the exemption under Sl.No. 1 of Notification No. 12/2017-C.T. (Rate) applies only to services by entities registered under Section 12AA of the Income Tax Act by way of charitable activities, specifically related to the preservation of the environment, including watershed, forests, and wildlife. RGCA's activities, such as research and development, consultancy, testing, and training, do not fall under this exemption as they are not directly related to the preservation of the environment. 2. Applicability of Compulsory Registration under Section 24: The appellate authority confirmed that RGCA must obtain GST registration in every state where it is liable, as per Section 24 of the CGST and TNGST Act. This is because RGCA's activities involve taxable supplies, and the exemption under Section 23 does not apply to them. 3. Need for Separate GST Registrations in Different States: The appellate authority upheld the original ruling that RGCA must obtain separate GST registrations in each state where it operates. This is necessary to comply with the provisions of the GST laws, which require registration in each state where taxable supplies are made. 4. Applicable Tax Rates on RGCA's Transactions: The appellate authority reviewed the tax rates applicable to RGCA's various transactions and upheld the original ruling: - Fish seeds and prawn/shrimp seeds (classified under 0301) are exempt from CGST and SGST. - Live fish (classified under 0301) are exempt from CGST and SGST. - Artemia cysts (classified under 0511) are taxable at 2.5% CGST and 2.5% SGST. - Research and development activities (classified under SAC 9981) are taxable at 9% CGST and 9% SGST. - Consultancy services related to nursery cage farming and hatching (classified under SAC 9986) are exempt from CGST and SGST. - Testing services (classified under SAC 9983) are taxable at 9% CGST and 9% SGST. - Training services to farmers and hatcheries (classified under SAC 9986) are exempt from CGST and SGST. - Training activities to students and academia (classified under SAC 9992) are taxable at 9% CGST and 9% SGST. 5. Documentation Required for Interstate Purchases: The appellate authority did not provide a ruling on the documentation required for interstate purchases, as this issue was not covered under Section 97(2) of the CGST Act. Conclusion: The appellate authority confirmed that RGCA is liable for GST registration and must comply with the applicable tax rates for their transactions. The authority also emphasized that RGCA's activities do not qualify for the exemptions under Sl.No. 1 and 54 of Notification No. 12/2017-C.T. (Rate). The classification of Artemia cysts under CTH 0511 was upheld, and the appellant's claims for exemptions and alternative classifications were rejected. The appeal was disposed of accordingly.
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