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TMI Blog2019 (3) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.06.2017. Reference is also invited to Circular No. 16/16/2017-GST dated 15.11.2017 which squarely delineates applicability of GST on agricultural produce. It has been made very much clear vide this circular that what is an agricultural produce and what is not. This circular is an excellent guide to determine whether a particular produce can be termed as an agricultural produce or not. Vide this circular it has also been made clear that any clarification issued in the past contrary to this circular in the context of Service Tax or VAT/ Sales Tax is no more relevant. There is no reason to interfere with the Ruling given by the Authority for Advance Ruling - AAR decision upheld. - RAJ/AAAR/01/2018-19 - - - Dated:- 15-10-2018 - MS. ARCHANA P. TIWARI, AND SH. ALOK GUPTA, MEMBER Present for the applicant: Shri Alok Kumar Kothari, CA BRIEF FACTS OF THE CASE 1. M/s. Sardar Mal Cold Storage Ice Factory(hereinafter referred to as Appellant ) had submitted an application seeking an Advance Ruling on the Entry No. 24 of the Notification No. 11/2017-Central tax (Rate) dated 28/06/2017 which at S. No. 24 (i)(i)(e) provides tax rate as NIL for services of loadin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the agriculture produce as defined under explanation- 4(vii) of the Notification No. 1 1/2017 Central tax(Rate) dated 28/06/2017 and Notification No 12/2017-Central Tax (Rate) dated 28/6/17 (at point 2(d) of the notification) hence attracts NIL rate of duty as per S. No. 24 of the notification no 11/2017 or S. No 54 of the notification no 12/2017. 5. Appellant sought Advance Ruling on the question whether all the goods as listed in their application are covered under the definition of agriculture produce as defined under explanation 4 (vii) of the Notification No. 11/2017-Central tax (Rate) dated 28/06/2017 and Notification No 12/2017-Central Tax (Rate) dated 28/6/17 (at point 2(d) of the notification) hence attracts NIL rate of duty as per S. No. 24 of the notification no 11/2017 or S. No 54 of the notification no 12/2017. 6. Authority for Advance Ruling (AAR) vide its Ruling dated 11.06.2018 ruled that Goods mentioned under Group A falls under the definition of Agricultural Produce in terms of the aforesaid notification and so supply of cold storage service in relation to these is exempt from the levy of GST. However if any processing is done on these products as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ander (Dhaniya) 3. Cumin seeds (Jeera) 4. Carom seeds (Ajwain) 5. Fenugreek Seeds(Kasoori Methi Dried) 6. Mustard Seeds (Sarson) 7. Brown Mustard Seeds(Rai) 8. Nigella Seeds (Kalonji) 9. Poppy seeds (Posara daana) The goods covered by this group are agriculture produce and brought by farmers in a ready to marketable shape. But being a product of agriculture the product contains certain small pieces of stones, dust, mud and other impurities etc. In order to sale to consumers and as per the requirement of various other allied laws like Food Safety and Standards Authority of India (FSSAI) The produce are require to be clean therefore aforementioned impurities are removed by cleaning which is either done by the cultivator or traders before it comes for storage purpose. But the agriculture produce retains its essential character and there is no change in the product or its marketability due to the cleaning process. The products which are sold by cultivator and stored at the appellant s cold storage, remains the same agriculture product except the difference that farmers sold the goods with small pieces of stones, dust, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riculture produce which is given in the explanation provided at Pt. No. 4 (vii) of the Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and hence attracts NIL rate of duty. 2. That the appellant will reproduce the sample of the goods at the time of Hearing, before the Bench to explain the contention. Group-C Name of goods Stage at which commodities come for storage and process if any applied by the Farmers/Cultivators/Traders before the products comes for Storage Purpose. Remarks 1. Tamarind (Imli) The Tamarind are primarily produced or cultivated by small farmers who remove the shell or the upper part and bring the inner part (which is the consumable part of Tamarind) for sale. The Tamarind may or may not come for storage with seeds. 1. That as per the description provided in Column No. 2 there is a clear cut storage of the agriculture produce and the appellant seeks the advance ruling over the coverage of the goods covered by Column No. 1 under the definition of agriculture produce which is given in the explanation provided at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The product always retains its natural shape as the bark is outermost part of the trees and without any processing it is ready to use or consume. lt comes to market for sale and in a same shape /form as it is obtained by the farmers and also comes to storage houses in a same form as it is purchased from farmer as no processing is require. There is no intermediary process is ever done or require right from the point of peeling of the skin till the point of consuming. 1. That as per the description provided in Column No. 2 there is a clear cut storage of the agriculture produce and the appellant seeks the advance ruling over the coverage of the goods covered by Column No. 1 under the definition of agriculture produce which is given in the explanation provided at Pt. No. 4 (vii) of the Notification No. 11/2017-Central tax (Rate) dated 28/06/2017 and hence attracts NIL rate of duty. 2. That the appellant will reproduce the sample of the goods at the time of Hearing, before the Bench to explain the contention. Group-F Name of goods Stage at which commodities come for storage and process if any appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e product. The goods are always stored in its form without any processing ever done right from the stage of cultivator till storage. The removal of outer shell can never be categorised by any stretch of imagination as a its never process as either contributes to marketability or changing the essential character of the agriculture produce. 1. That as per the descript ion provided in Column No. 2 there is a clear cut storage of the agriculture produce and the appellant seeks the advance ruling over the coverage of the goods covered by Column No. 1 under the definition of agriculture produce which is given in the explanation provided at Pt. No. 4 (vii) of the Notification No. 11/2017-Central tax (Rate) dated 28/06/2017 and 2. hence attracts 'NIL' rate of duty. That the appellant will reproduce the sample of the goods at the time of hearing before the Bench to explain the contention. 12. That the above discussions in relation to the products categorised above it is very clear that none of the products discussed above goes through any processing till they come to the cold storage which changes the essential character or marketability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication. Discussion made in Board circular are of the process which changes the nature of the agriculture produce but process like simply cleaning or packing cannot be termed as process which takes the goods out of definition of agriculture produce. PERSONAL HEARING 16. Personal hearing was given to appellant on 09.10.2018. Shri Alok Kumar Kothari, Advocate, appeared for Appellant for personal hearing on 09.10.2018. During the PII he reiterated the submission already made in the appeal memo. Discussion and Findings 17. The issue to be decided by us is whether the goods mentioned in Group A to Group G which comes for storage will come under the definition of Agricultural produce or not and whether the supply of Cold Storage services by the appellant to the goods attracts Nil rate of tax or not as per Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and Notification No 12/2017-Central Tax (Rate) dated 28/06/2017 18. Before proceeding further, we are reproducing relevant portion of the notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and notification No. 12/2017 Central tax (Rate) dated 28/06/2017. 18.1. As per Notification No. 11/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or producer which does not alter its essential characteristics hut makes it marketable for primary market. 18.2 As per Notification No. 12/2017 Central tax (Rate) dated 28/06/2017, Sr. No. 54 in the table therein, Central tax on the intra-State supply of services of description Support services to agriculture, forestry, fishing, animal husbandry is exempt . In the said notification, in the Table, as per serial number 54, description of service given as 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 of farm labour; processes carried out at an agricultural far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sara Dana) : The Appellant has mentioned that the above products are subjected to cleaning of dust, mud and impurities at the end of the trader. They have added that the process of cleaning or removing the dust does not change the essential character of the goods in question nor add any marketability to the product. We find that the process of cleaning adds to the value for farmer when the product is taken for sale in the primary market. And this process can be undertaken at the farm level also. Hence Services of storage or warehousing of such produce would remain exempt under the above said notifications No. 11/2017-Central Tax (Rate) and 12/2017- Central Tax (Rate) both dated 28.06.2017. However if any processing is done on above products as is not usually done by a cultivator or producer at farm level, then these would fall outside the definition of agricultural produce as given in the aforesaid Notification No. 11/2017Central Tax (Rate). Group B Turmeric (Haldi), Dried Ginger (Sonth), Dates(Khajoor) , Dry Dates (Chhuhara): The Appellant has mentioned that in order to make them marketable both the cultivator or the farmer undertakes the process of pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter goods are bought by the traders in the same form and shape as it is bought by the farmers to the Mandi. The traders who bought the goods don t process it any further before bringing the goods for storing the goods at cold storage. Thus, the product in questions retains it essential character as agriculture produce. We find that all the above mentioned produces are obtained from processing of their green counterparts . Farmers bring green or raw produce in the market which in turn is purchased by the Traders who then undertake certain processes such as washing , cutting, shelling, cleaning, drying, packing etc. These processes lead to a considerable value addition as compared to that of product sold in primary market which is in itself reflection of change in there essential characteristic hence the above cannot be characterized as Agricultural produce and Services of storage or warehousing of such produce would not remain exempt under the above said notifications No. 11/2017-Central Tax (Rate) and 12/2017- Central Tax (Rate) both dated 28.06.2017. (Group E) Cinnamon (Dalchini), Gum (Gond), Arjuna Chaal (Arjun Chaal) The Appellant has submitted that the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s removed. Thus the above produce without shell do not fall into the category of Agricultural Produce and Services of storage or warehousing of such produce would not remain exempt under the above said notifications No. 11/2017-Central Tax (Rate) and 12/2017-Central Tax (Rate) both dated 28.06.2017. (Group G) Dry fruits such as Fig (Anjeer) Almond (Badaam), Walnuts (Akhrot), Pistachio (Pista), Lotus Seed Pop (Phool/ Tal Makhana) etc. The Appellant has submitted that the product in a question is product with outer shell which has no use so it is removed before storage. The removal of outer shell can never be categorised by any stretch of imagination as a process as its never contributes either to marketability or changing the essential character of the agriculture produce. We can t subscribe to the theory advanced by the Appellant. These products are sold in primary market by Cultivator as raw and green. Various processes like cleaning, deshelling, specialized drying, sorting, grading, packing etc. are then undertaken before these goods become ready for consumption by the consumer. These are not the processes which can be undertaken at the farm. These processes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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