9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 187 - AAR - GSTExemption from GST - Valuation of supply - providing services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System - rate of tax applicable on the value of supply - components to be included in calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018- Central Tax (Rate). Whether the instant supply shall qualify as an exempt supply vide entry no. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 (as amended vide Notification No. 2/2018- Central Tax (Rate) dated 25.01.2018) or the same shall be taxable @ 5% as clarified in para 3.2 of the Circular No. 153/09/2021-GST dated 17.06.2021 issued by the CBIC? HELD THAT - It appears that the activities undertaken by them for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. Whether this composite supply is made in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - HELD THAT - The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance Control) Order, 2013 - reference made to Para 3.1 of the Circular No. 153/09/2021-GST dated 17.06.2021 where it is stated that Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which lists the activities that may be entrusted to a Panchayat under Article 243G of the Constitution. Hence, the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Valuation - inclusion of value of by-product - non-monetary consideration - Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT - value of by-products so retained by the appellant yielded during milling - value of supply shall be the consideration in money and shall also include all the components towards non-cash consideration - the non-monetary considerations include gunny bags, bran and refraction Department of Food Supplies, Government of West Bengal vide memo no. 569(3)-FS/Sectt./Food/4P-02/2016/2021 dated 18th February 2022 has explained that These bi-products are valued as per market price @ Rs. 20/kg of Bran and Re 1/kg of Refractor. So, consideration from sale of 4kg Bran and 1kg refractor comes to Rs. 81 only. 100 Kg wheat is supplied to flour millers in 2 gunny bags. The flour millers retained those 2 gunny bags, which are valued at Rs. 43 only. Thus the total non-cash consideration for bi-products and gunny bags allowed to flower millers is Rs. 124 only for each 100 kg wheat - So, in the instant case, the amount of Rs. 124 may be considered as equivalent to the consideration not in money for the purpose of determination of value of supply under clause (b) of rule 27 of the GST Rules and such amount is admittedly known to the applicant at the time of supply. We therefore find the total value of supply to be Rs. 260.48 out of which Rs. 136.48 is the cash consideration and Rs. 124 is the non-cash consideration, as it has been explained in the aforesaid memo. The value of goods involved in the instant supply stands at Rs. 60/- against total value of supply of Rs. 260.48, thereby the value of goods involved in the instant composite supply stands at 23.03% of the total value of supply i.e., it does not exceed 25% of the value of the composite supply. The instant supply of services by way of milling of food grains into flour (atta) to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the supply satisfies all the conditions specified in the said entry.
Issues Involved:
1. Value of supply of services provided by the applicant to the State Government. 2. Rate of tax applicable on the value of supply and components to be included in the calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018-Central Tax (Rate). Summary: 1. Value of Supply of Services: The applicant, a flour miller, entered into a contract with the State Government to convert wheat into fortified atta, retaining ownership of wheat and atta with the State Government. The applicant receives Rs. 179.48 per quintal for crushing, fortification, packing, and transportation, with Rs. 136.48 as cash consideration after deducting Rs. 43 for gunny bags. Additionally, the applicant retains bran and refraction generated during milling, valued at Rs. 20/kg and Re 1/kg respectively. Thus, the total value of supply is Rs. 260.48, comprising both cash and non-cash considerations. 2. Rate of Tax Applicable: The supply qualifies as a composite supply under Section 2(30) of the GST Act, where milling is the principal supply. The supply is related to a function entrusted to a Panchayat under Article 243G of the Constitution. Notification No. 2/2018-Central Tax (Rate) exempts such composite supplies if the value of goods does not exceed 25% of the total value. Here, the value of goods (packing material and fortification charges) is Rs. 60, which is 23.03% of the total value of Rs. 260.48. Hence, the supply is exempt from GST under entry 3A of Notification No. 12/2017-Central Tax (Rate). Observations and Findings: The Authority noted that the activities undertaken by the applicant qualify as a composite supply where milling is the principal supply. The supply is made in relation to a function entrusted to a Panchayat under Article 243G. The value of goods involved does not exceed 25% of the total value of the composite supply, thus qualifying for exemption under Notification No. 12/2017-Central Tax (Rate). Ruling: The composite supply of services by way of milling food grains into flour (atta) to the Food & Supplies Department, Govt. of West Bengal, for distribution under the Public Distribution System is eligible for exemption under entry serial no. 3A of Notification No. 12/2017-Central Tax (Rate), as amended, since the value of goods involved does not exceed 25% of the value of supply.
|
