9911796707
TMI Blog2022 (9) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant has entered into an agreement with the District Controller of Food and Supplies, Government of West Bengal for supply of fortified wholemeal atta. According to the said agreement, the State Govt. (Food & Supplies Department) sends the whole, unpolished food grain to the applicant for crushing and processing it into flour. The applicant returns the flour(atta) packed in the manner as the State Govt. requires by fortifying the crushed grain with the vitamin which is then distributed through the Public Distribution System (PDS) by the State Govt on behalf of Foo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and 1% in the form of refraction for cleaning. These bran and refractors generated are retained by the applicant for sale in the open market. In addition to this, the applicant retains the gunny bags into which food grains are supplied to him by the Government. These gunny bags are also available for sale in the market. 2.4 The applicant contends that the instant supply is covered under serial no. 3A of Notification no. 12/2017-Central Tax (Rate) dated 28th June 2017, as amended from time to time, and therefore is exempted from payment of tax. Description of services as specified in serial number 3A reads as follows: "Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity 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" 2.5 The applicant further contends that following co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in exercise of power conferred by section 3 of The Essential Commodities Act1955 and the same extends to the whole of West Bengal except the area where the West Bengal Urban Public Distribution System(Maintenance and Control) Order, 2013 is in force with Government of India Ministry of Consumer Affairs. * The West Bengal Public Distribution System (Empanelment of Flour Mill and Milling of Fortified Atta/Wholemeal Atta) guidelines 2017 has been framed in pursuance of clause 36 and 37 of the West Bengal Public Distribution system (Maintenance and Control) Order 2013 and clause 33 and 34 of West Bengal Urban Public Distribution System (Maintenance and Control) Order 2013. * 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 Dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cash and non-cash consideration are provided below: Sl No. Flour Millers to be paid for crushing of 100 kg of Wheat Cost for 95 kg atta 1 Crushing Charges 90.78 2 Fortification Charges 10 3 Packing Charges 50 4 Transportation & Handling charges 28.70 5 Consideration from sale of Bran 97 6 Consideration from sale of Refractor 2.24 7 Total consideration 278.72 Less: Non-cash consideration 8 Cost of 2 gunny bags -43 9 Receipt from sale of Bran and Refractor -99.24 10 Net Cash Consideration 136.48 * In the given case, the value of supply of goods are as follows: a. Fortification charges - Rs. 10 b. Packing Charges - Rs. 50 * The cost of purchase of Fortification material is Rs. 140/kg. For 95 kg atta, 20 gm of fortification is required. Therefore, the cost towards fortification in making 95 kg of atta is (140*20/1000*1.18) = Rs. 3.30. The value of fortification assumed by the Food and Supplies Department while paying the consideration of crushing of 100 kg of wheat is Rs. 3.30. * The cost of packing material is Rs. 125.85 / kg. In each kg of packing material, there are 300 packets available. Each packet contains 0.95 kg of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case, the principal is the State Government. The State Government is registered for TDS under Section 51 of the CGST Act 2017. Whether they would be within registered person for the purpose of job work has been clarified in Para 3.2 of the Circular no. 153/09/2021-GST dated 17th June 2021: "In case the supply of service by way of milling of wheat into flour or of paddy into rice, is not eligible for exemption under Sl. No. 3 A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 for the reason that value of goods supply in such a composite supply exceeds 25%, then the applicable GST rate would be 5% if such composite supply is provided to a registered person, being a job work service (entry No. 26 of notification No. 11/2017- Central Tax (Rate) dated 28.06.2017). Combined reading of the definition of job-work [section 2(68), 2(94), 22, 24, 25 and section 51] makes it clear that a person registered only for the purpose of deduction of tax under section 51 of the CGST Act is also a registered person for the purposes of the said entry No. 26, and thus said supply to such person is also entitled for 5% rate." 2.12 The applicant thus concludes that the provision of milli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of supply of goods does not constitute more than 25% of the value of the said composite supply. 3.4 Para No. 3.2 of the Circular No 153/09/2021- GST dated 17.06.2021 implies that "in case the supply of service by way of milling of wheat into flour is not eligible for exemption under SI No 3A of Notification 12/2017 Central Tax (Rate) dated 28.06.2017 for the reason that the value of goods supply in such a composite supply exceeds 25%, then the applicable GST rate would be 5%. 4. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorised representatives of the applicant during the course of personal hearing. We have also considered the submission made by the officer concerned from the revenue. 4.2 The issue involved in the instant case, as we find, is to determine 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 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igures 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. 4.7 The issue now left with us is to ascertain whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not. According to the applicant, the value of supply of services in respect of milling of 100 kilograms wheat should be Rs.278.72 though the applicant receives consideration in cash only to the tune of Rs.136.48 against such supply. The applicant has contended that the value of supply shall include consideration not received in money but otherwise in the form of cost of gunny bags retained by him and also the receipt from sale of Bran and Refractor. Para 6(1) of the agreement speaks that 'The out-turn ratio of Atta will be minimum of 95% per quintal of wheat allowing refraction of 1% for cleaning and 4% for debranning to the maximum'. 4.8 The applicant has submitted that he gets non-cash consideration in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 vide Notification No. 2834-FS dated 06.09.2017. This is also mentioned in the bi-partite agreement between the DCF&S/DR and the flour millers. 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." 4.14 For the purpose of determination of value of supply, we find that since price is not the sole consideration for the instant supply, the provision of Rule 27 would apply here which governs the provisions of value of supply of goods or services where the consideration is not wholly in money. In terms of clause (b) of the said rule, the value of supply shall be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply. In view of the memo no. 569(3)-FS/Sectt./Food/4P-02/2016/2021 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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