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2019 (11) TMI 1322 - 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. Rate of GST on tobacco leaves procured at auction platforms or directly from farmers. 2. Rate of GST on tobacco leaves purchased from other dealers. 3. Rate of GST on graded tobacco leaves. 4. Rate of GST on butted tobacco leaves. 5. Rate of GST on re-dried tobacco leaves. 6. Rate of GST on threshed and re-dried tobacco leaves. 7. Rate of GST on threshed and re-dried tobacco leaves on job work basis. Issue-wise Detailed Analysis: 1. Rate of GST on Tobacco Leaves Procured at Auction Platforms or Directly from Farmers: The applicant sought clarity on the GST rate applicable to tobacco leaves procured at auction platforms or directly from farmers, which are cured and dried by farmers. The ruling states that the GST rate for such tobacco leaves is 5% under the reverse charge mechanism as per Notification 4/2017-CGST (Rate). 2. Rate of GST on Tobacco Leaves Purchased from Other Dealers: The applicant queried the applicable rate of tax if they purchase tobacco leaves from other dealers who have acquired them from farmers for trading purposes. The ruling confirms that the applicable GST rate 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. Rate of GST on Graded Tobacco Leaves: The applicant asked about the GST rate if they segregate tobacco into grades based on size, color, length, and texture, and then sell such graded tobacco leaves. The ruling states that the applicable GST rate remains 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. Rate of GST on Butted Tobacco Leaves: The applicant inquired about the GST rate if the tobacco leaves are butted and sold to other dealers. The ruling clarifies that the applicable GST rate 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. Rate of GST on Re-dried Tobacco Leaves: The applicant sought the applicable GST rate if they get the tobacco leaves re-dried without threshing. The ruling states that the applicable GST rate 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. Rate of GST on Threshed and Re-dried Tobacco Leaves: The applicant asked about the GST rate if they get the tobacco leaves threshed and re-dried. The ruling specifies that the applicable GST rate for threshed and re-dried tobacco leaves 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. Rate of GST on Threshed and Re-dried Tobacco Leaves on Job Work Basis: The applicant inquired about the GST rate if they get the tobacco threshed and re-dried on a job work basis at others' premises and then sell such threshed and re-dried tobacco leaves. The ruling confirms that the applicable GST rate 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. Summary: The judgment provides a detailed analysis of the GST rates applicable to various stages and processes of tobacco leaves. It distinguishes between different processing activities such as grading, butting, re-drying, and threshing, and specifies the applicable rates of GST for each scenario, ensuring clarity for the applicant's operations under the GST framework.
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