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2019 (11) TMI 1253 - 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. 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. 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 - It is to note that though there are different entries with respect to tobacco there is a specific entry in Schedule I of Notification 1/2017 (CGST Rate) as Tobacco leaves and for the same the liability was brought under reverse charge mechanism. Hence it is clear that the commodity tobacco leaves is distinct from the other entries in this aspect. 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 Sl.No. 13 of Schedule IV Notification No.1/2017-Central Tax (Rate) dated 28.06.2017.
Issues Involved:
1. GST rate on tobacco leaves procured from auction platforms or directly from farmers. 2. GST rate on tobacco leaves purchased from other dealers for trading. 3. GST rate on graded tobacco leaves. 4. GST rate on butted tobacco leaves. 5. GST rate on re-dried tobacco leaves without threshing. 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 Auction Platforms or Directly from Farmers: The Authority for Advance Ruling (AAR) determined that 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%. This rate is prescribed under Notification No. 4/2017 Central Tax (Rate). 2. GST Rate on Tobacco Leaves Purchased from Other Dealers for Trading: The applicable GST rate for tobacco leaves purchased from other dealers who have sourced them from farmers for trading purposes is 5%. This is in accordance with SI.No.109 of Schedule I of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017. 3. GST Rate on Graded Tobacco Leaves: When the applicant segregates the tobacco into grades based on size, color/shade, length, texture, etc., and sells such graded tobacco leaves, the applicable GST rate is 5%. This falls under SI.No.109 of Schedule I of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017. 4. GST Rate on Butted Tobacco Leaves: The GST rate for tobacco leaves that are butted and sold to other dealers is also 5%, as per SI.No.109 of Schedule I of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017. 5. GST Rate on Re-dried Tobacco Leaves Without Threshing: If the applicant gets the tobacco leaves re-dried without threshing, the applicable GST rate remains 5%, in line with SI.No.109 of Schedule I of 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%. This is specified under SI.No. 13 of Schedule IV of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017. 7. GST Rate on Threshed and Re-dried Tobacco Leaves Processed on Job Work Basis: For tobacco leaves that are threshed and re-dried on a job work basis at others' premises and then sold, the applicable GST rate is 28%, as per SI.No. 13 of Schedule IV of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017. Conclusion: The AAR provided a detailed analysis of the GST rates applicable to various stages and forms of tobacco leaves handled by the applicant. The ruling clarified that the GST rate is 5% for most forms of tobacco leaves, except for threshed and re-dried tobacco leaves, which attract a higher GST rate of 28%. This distinction is crucial for compliance and accurate tax calculation in the tobacco trade.
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