2020 (10) TMI 812 - AAR - GST

Taxable supply or not - transaction of supplying Kharif Arhar (Tur) Crops and Green Gram crops from farmers to NAFED - rate of tax to be charged for sale of Agricultural produce to NAFED - Input tax credit on GST paid on purchase of Gunny bags by KSCMFL - deduction of TDS - applicability of Section 51 and Notification 50/2018 - Central Tax dated 13 th September 2018. HELD THAT - In the instant case, the applicant is involved in the supply of the Kharif Arhar (Tur) and Kharif Green Gram to NAFED procured from the farmers for which applicant receives consideration in the course or furtherance of business. Hence the supply of Kharif Arhar (Tur) and Kharif Green Gram to NAFED by the applicant amounts to supply in terms of Section 7(l)(a) of the CGST Act 2017. Exempted supply or not - HELD THAT - The tariff item 0713 relating to Dried Leguminous Vegetables, shelled, whether or not skinned or split listed under the entry No.45 of the Notification No.2/2017- Central Tax(Rate) dated 28th June, 2017. Hence the supply of tur dal and green gram without any brand name by the applicant to NAFED is an exempted supply as per entry No.45 of the Notification No.2/2017- Central Tax(Rate) dated 28th June, 2017. Input tax credit - HELD THAT - The applicant purchasing gunny bags from third parties to pack the procured Kharif Arhar (Tur) and Kharif Green Gram from the farmers, by paying GST @ 5%. Since the supply of tur dal and green gram is an exempted supply as per entry No.45 of the Notification No.2/2017- Central Tax(Rate) dated 28th June, 2017 the input paid on purchase of gunny bags is ineligible to claim as input tax credit as per subsection 2 of section 17 of the CGST Act, 2017. The subsection 2 of section 17 of the CGST Act 2017 clearly says that, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies - hence, input tax paid on the purchase of gunny bags shall not be claimed as input tax credit as per subsection 2 of section 17 of the CGST Act 2017 as the applicant used the said gunny bags for packing and supplying exempted goods. Deduction of TDS - HELD THAT - The applicant is neither established by any Government with 51% or more participation by way of equity or control, to carry out its function nor is a Society established by the Central Government or the State Government or a local authority under the Society Registration Act, 1860. Hence the applicant is not covered under the list provided either in the Notification 50/2018 - Central Tax dated 13/09/2018or under the list prescribed under Section 51 of CGST/KGST Act,2017.Therefore the provisions of TDS as prescribed under section 51 of CGST/KGST Act, 2017 are not applicable to the applicant.

Issues Involved:
1. Taxability of the supply of Kharif Arhar (Tur) and Green Gram to NAFED.
2. Eligibility of Input Tax Credit (ITC) on GST paid for gunny bags.
3. Applicability of TDS provisions under Section 51 of CGST/KGST Act, 2017.

Issue-wise Detailed Analysis:

1. Taxability of the Supply of Kharif Arhar (Tur) and Green Gram to NAFED:
The applicant, acting as the State Level Supporter (SLS) under the Price Support Scheme (PSS) announced by the Government of India, procures Kharif Arhar (Tur) and Kharif Green Gram from farmers and supplies them to NAFED. The transaction involves the supply of goods for consideration in the course of business, thus qualifying as a 'supply' under Section 7(1)(a) of the CGST Act, 2017. The Kharif Arhar (Tur) and Kharif Green Gram are classified under Chapter 7 of the Custom Tariff Act and fall under HSN Classification 07136000 and 07133100 respectively. As per entry No.45 of Notification No.2/2017-Central Tax (Rate) dated 28th June 2017, the supply of these items without any brand name is exempt from GST.

2. Eligibility of Input Tax Credit on GST Paid for Gunny Bags:
The applicant purchases gunny bags from third parties to pack the procured crops, paying GST at 5%. Since the supply of Kharif Arhar (Tur) and Green Gram is exempt from GST, the input tax paid on the purchase of gunny bags is ineligible for ITC as per subsection 2 of section 17 of the CGST Act, 2017. This section specifies that the credit amount shall be restricted to the input tax attributable to taxable supplies, including zero-rated supplies. Therefore, the input tax paid on gunny bags used for packing exempt goods cannot be claimed as ITC.

3. Applicability of TDS Provisions under Section 51 of CGST/KGST Act, 2017:
The applicant is a co-operative society registered under the Registrar of Co-operative Societies of Mysore and is not established by the Central Government, State Government, or a local authority under the Society Registration Act, 1860. Section 51 of the CGST Act, 2017 mandates TDS deduction by specific entities, including departments or establishments of the Central or State Government, local authorities, governmental agencies, or entities notified by the government. Notification 50/2018-Central Tax dated 13th September 2018 lists the entities required to deduct TDS, which does not include the applicant. Therefore, the TDS provisions under Section 51 of CGST/KGST Act, 2017 do not apply to the applicant.

Ruling:
1. The supply of Kharif Arhar (Tur) and Green Gram to NAFED is an exempt supply as per entry No.45 of Notification No.2/2017-Central Tax (Rate) dated 28th June 2017.
2. GST paid on the purchase of gunny bags cannot be claimed as input tax credit as per subsection 2 of section 17 of the CGST Act, 2017.
3. The provisions of TDS under section 51 of CGST/KGST Act, 2017 do not apply to the applicant.

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