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TMI Blog2018 (8) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in clause (72) of section 2 of the GST Act - The final product considering various processes undertaken by M/s. Unilever cannot be considered as Agricultural Produce. The assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s. 10B of the Act. Further, assessees who are in the business of blending and processing of tea in respect of undertakings in free trade zones are manufacturer/producer of tea for the purpose of claiming exemption u/s. 10A of the Act. The goods being stored in the applicant's godown are not agricultural produce as per definition given in Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 and the same is reiterated by Board Circular No. 16/16/2017-GST issued under F No. 354/173/2017-TRU dated 15.11.2017. Ruling:- Exemption provided in serial no. 54 to Notification No, 12/2017 Central Tax (Rate) is not applicable to the activity carried by the company. - GST-ARA-30/2017-18/B-38 - - - Dated:- 23-5-2018 - SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (Under section 98 of the Central Goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, acquire suitable lands and carry on agriculture. d) To produce material and fertilisers and insecticides and acquire agency in the above lines and act as commission agents. e) To act as clearing and godowns for proper and safe storing of valuable agricultural and horticultural produce and to provide goods and services of all kinds in connection therewith. f) To provide godowns and warehousing facilities for goods of all descriptions of agricultural and allied products. 2. Applicant had been granted license for carrying out business of warehousing under the Bombay Warehousing Act, 1959. Accordingly, Applicant had constructed Warehouse at various places including warehouse at Fursungi, Pune (hereinafter referred to as the said warehouse). The applicant had given on rent the said warehouse to M/s. Unilever India Exports Ltd (hereinafter referred to as Unilever) on specific compensation allowed under Bombay Warehousing Act. 3. M/s. Unilever India Exports Limited is procuring tea of various quality in bulk either from public tea auctions or directly from manufacturers of tea and undertaking blending and packing of the same at the said warehouse. After packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of-- (a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; (b) supply or farm labour; (c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (e) loading, unloading, packing, storage or warehousing of agricultural produce ; (f) agricultural extension services; Nil Nil (g) services by any Agricultural Produce Marketing Committee or Board or services prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all life forms of animals. b) Either no further processing is done or such processing is done as is usually done by a cultivator or producer on the said produce. C) The process undertaken does not alter its essential characteristics but makes it marketable for primary market. The process undertaken on green leaves consists of only above processes and not beyond them. All the three ingredients are fulfilled in the present case. a) The produce must emerge from cultivation of plants or rearing of all life forms of animals-Green leaves are plucked from the tea plant. Hence the first condition is undoubtedly fulfilled. b) Either no further processing is done or such processing is done as is usually done by a cultivator or producer on the said produce. 14. Tea leaves are plucked from the tea plants and the green leaves plucked from the tree are not fit for the human consumption and it cannot be sold in the open market for human consumption. The raw tea leaves are withered by exposure in the shadow of the sun or by heating in trays until pliable. Thereafter the leaves are rolled by hand or machine in order to break the leaf cells and liberate the juices and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the tea bush. The potential surfaced in the tea leaf when the mechanical processes of withering, crushing and roasting, fermenting by covering with wet sheets and roasting again were applied. The tea leaf was made fit for human consumption by subjecting it to those processes. At no stage, did it change its essential substance. It remained a tea leaf throughout. In its basic nature, it continued to be agricultural produce. Thus, the condition of processes not altering the essential characteristics of the agricultural produce is also satisfied. 18. The Hon'ble Supreme Court in case of COMMISSIONER OF SALES TAX, LUCKNOW vs. D.S. BIST ORS. (Annexure-I), while deciding issue under UP Sales Tax Act, 1948 had upheld that Tea leaves after drying and processing remained agricultural produce.. Similar view had been expressed by the Hon'ble Uttaranchal High Court in case of Dehradun Tea Company Ltd. vs State Of Uttaranchal And ors. [2006 148 STC 56 Uttra) (Annexure-2). 19. C(ii) The processes undertaken makes it marketable for primary market. The process undertaken is seen from the submission on record. it is not repeated herein it is the not direct activity l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubai. It is therefore requested to grant us some more time to submit the same. Accordingly, the detail process was submitted on record is considered while passing of order. Hence it is not repeated again here. 03. CONTENTION - AS PER THE CONCERNED OFFICER Submitted on this issue A. The submission, as reproduced verbatim, could be seen thus- QUESTION NO. 14. Whether Exemption Provided in Sr.No.54 of Notfn No. 12/2017-Central Tax (Rate) is applicable to the activity carried by the Company- Reply- The Question raised by the applicant have already solved as per the Board Circular No. 16/16/20 17-GST issued under F.No.354/173/2017-TRU dated 15.11.2017 as per Sr.No. 4 and 7 (Anne.I) which is as under Sr.No.4- Green Tea Leaves are falling in the definition of Agricultural Produce and Tea is not falling in the definition of Agricultural produce Sr.No.7- It is hereby clarified that processed products such as Tea(i.e. black tea, white tea etc)processed coffee beans or powder, pulses(dehusked or spit), jaggery, processed spices, processed dry fruit, processed cashew nuts ete fall outside the definition of agricultural produce given in the Notfn No.11/2017-CT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce means any produce of agricultural on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes marketable for primary market The Definition of agricultural produce for the purpose of Sr.54 of Notfn No. 12/2017 in GST is as under- agricultural produce means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator producer which does not alter its essential characteristics but makes it marketable for primary market; On going through the definition of agriculture produce in Service Tax and GST, it seems that there is no change in the definition of agriculture produce viz. TEA after GST Also Board vide Circular No. 16/16/2017 -GST issued under F.No.3 54/173/2017-TRU dated 15.11.2017 clearly clarified that the green tea leaves is a agricultural produce but tea is a processed product made in tea factories after carrying out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or recovery of govt dues since 01.07.2012. Applicant is submitting the documents in piece meal basis which cause incontinence in enquiry therefore Deptt. have issued summons calling for the documents. B. Question No. 16-STATEMENT CONTAINING THE APPLICANT' INTERPRETATION OF LAW AND/OR FACTS AS THE CASE MAY IN RESPECT OF THE AFORESAID QUESTIONS(S)i.e. applicant's view point and submission on issues on Which the advance ruling is sought The Statement containing the applicant's interpretation of law is based on the legal provisions which were valid up to 30.06.2012. The changes made by the Govt. in the definition of Agriculture Produce after 01.07.2012 and nature and category of service recipient is not considered while filling application under Advance Ruling. The definition of Agricultural produce as defined under Section 65B (5), for the purpose of clause (102) of Section 65, w.e.f. 01 .07.2()12 in Finance Act, 1994 is as under: agricultural produce means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were conducted and enclosed copies of correspondence but not enclosed the copies of decision of enquires. On perusal of the said letters, it is observed that the instant issue of evasion of tax by willful mis-declaration of processed tea as agricultural produce was never taken up for investigation by the deptt. in past. The said correspondence from the department was for other reasons as under 1) Vide letter dtd 11.10.2004 an enquiry was made for non filling of ST-3 Returns for the period Sept 2002 to Oct 2004. 2) Vide letter dtd 22.11.2007 and 30.08.2008 an enquiry was made for non payment of Service Tax on Renting of Immovable Property. It is further to mention that the applicant vide letter informed that the warehouse were used for storage of tea and hence registration was cancelled vide letter dated 30.10.2004. However, as per the ACES system, the applicant has obtained online Registration Certificate bearing No. No. AAACN7084LST001 on for storage and warehousing services and the same is valid till date. It is therefore requested to consider the legal provision of the Service Tax/ GST/ Foreign Trade Policy while taking the decision on the application as evasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exemption in Sr.No.54 of Notfn No. 12/2017 dated 28.06.2017 are as under Sr. 54 -Services relating to cultivation of plants and rearing of all life forms of animals, except the reading of horses, for foods, fibre, fuel, raw material or other similar products or agricultural produce falling under Chapter 9986 by way of- (a) to (d) (e) Loading, unloading, packing, storage or warehousing of agricultural produce (f) to (g) As per GST Tariff, the services classified under group 9986 is as under SUPPORT SERVICES TO AGRICULTURE, HUNTING, FORESTRY, FISHING, MINING AND UTILITIES 998611 Support Services to Crop production 998612 Animal Husbandry Services 998613 Support Service to hunting 998614 Support Services to forestry and logging 998615 Support Services to agriculture, hunting, forestry an fishing In this case applicant is providing support services to manufacturing unit i.e. business entity whereas the exemption is applicable to support services provided to Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Sales Tax Vs. D.S. Bist and others dated 11.09.1979 Issue -Assessee, agriculturist and having owned Tea Garden grown tea leaves on his own land, after carrying out some kind of process or treatment, tea is sold therefore the sale of tea effected by him was exempted from sales tax under the proviso to the Act. The Sales Tax authorities rejected the assesee 's contention. Decision -While giving decision High Court held that sales of tea leaves were not exigible to sale tax. The commodity which was sold was not different from the commodity therefore the proviso to Sr.2 (i) of the Act is attracted. The decision given in the above case is relating to exemption from payment of sale Tax allowed to Agriculturist of Tea, whereas in applicant's case, the applicant is providing Services to the manufacturing Tea unit registered as 100% EOU, hence the same decision is not applicable as the tea is manufactured goods classified under CSH 0902 under Head Tea whether or not flavored (other than unprocessed Green Tea Leaves attracting CGST -2.5%, SGST -2.5% and IGST -5% in GST Tariff. b) Uttaranchal High Court in the case of Dehradun Tea Company Ltd Vs. State of Uttar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of Notification No. 12/2017 and manufacturing activities carried out at manufacturing units while answering the questions raised by the applicant . 04. HEARING The case was taken up for Preliminary hearing on dt. 28.03.2018 with respect to admission or rejection of present application when Shi Ghanshayam L Navalakha, Director alongwith Sh Bhushan Patil, C.A. appeared and contended for admission of application as per their contentions made in ARA. During hearing Jurisdictional Officer, Sh. Sachin Ghagare, Asstt. Commr. Division-II (Swargate) Pune-II, CGST Commissionarate, Pune also appeared and made written submissions and contended that investigations against the applicant is already going on and therefore their application is required to be rejected. Further he was requested to produce documentary evidences in respect of initiation of investigation at the earliest. The applicant was also requested to submit their contentions and written submissions in this regard. The application was admitted and called for final hearing on 24.04.2018, Sh. Suresh Singh C.A along with Sh. Chanshayam L Navalakha, Director and Sh. Bhushan Patil, C.A. appeared and written submissions an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market; (d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (e) loading, unloading, packing, storage or warehousing of agricultural produce; (f) agricultural extension services; Nil Nil (g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce. In order to resolve present controversy, it is necessary first to understand the expression 'Agricultural Produce We find that the expression 'Agriculture Produce' is defined under Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017) which is as below: 2. Definitions. - For the purposes of this notification, unless the context otherwise requires, the Definition of agricultural produce for the purpose of Sr.54 of Notification No. 12/2017 under the GST law is as under- (g) Agricultural produce means any produce out of cultivation of plants and rearing of all life forms of animals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conveying thru bucket elevator to feed hopper 9. Transferring teas to Blend Drum Blending Under covered condition 10. Conveying and drawing Blended Tea into Mobile Storage Hopper Closed Hopper, Blended tea checked for sensorial and other Lab clearance 11. Placing Mobile Hopper on machine chute having Mesh and Magnetic Grid 5000 Gauss Strength. 12. Filling tea into Tea bags on Constanta Machine 13. Auto filling of Tea bags into Inner carton Online Quality checks for Tea bag Quality 14. On line Lid closing of Inner carton 15. On line Laser Coding on Inner carton 16. On line over wrapping of Inner carton 17. Packing into Outer Shipper End of line Quality checks and Insp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of Section 10A/10B of the I.T. Act, 1961? 37. Accordingly, we answer the question referred in favour of the assessee by holding that the assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s. 10B of the Act. Further, assessees who are in the business of blending and processing of tea in respect of undertakings in free trade zones are manufacturer/producer of tea for the purpose of claiming exemption u/s. 10A of the Act. We have examined and discussed the facts in the case of Madhu Jayanti International Ltd. and found that there is blending of tea and consequently the assessee is eligible for exemption u/s. 10B of the Act as prayed for. Further the judgments cited by the jurisdictional office namely Union of India Vs. Belgachit Tea Co . and Brook Bond Lipton India Ltd cited supra support the view that 'Tea' is a manufactured product and not agricultural produce. Thus, we find that the goods being stored in the applicant's godown are not agricultural produce as per definition given in Notification No.12/2017-Central Tax (Rate) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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