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TMI Blog2023 (2) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Tax (Rate) dated 28.06.2017 as amended by Notification No.7/2022-Central Tax (Rate), dated 13-07-2022 applies to Coir-Pith Compost other than pre-packaged and labelled. The registered person sells coir-pith compost in 30 kg and above quantity bags with un-registered brand name SURYA . In such cases, whether the registered person is liable to tax under the GST Acts? - HELD THAT:- The Applicant states that he sells coir pith compost in a sack of 30 kg and above with unregistered brand name 'SURYA' and wants to know the taxability on the same - the provisions of Chapter II of The Legal Metrology (Packaged Commodities) Rules, 2011 applies to cement and fertilizers even though they are sold in bags up to 50 Kg. In view of the definition of organic fertilizer and the process adopted by the applicant to manufacture coir pith compost, it can be said that coir pith compost is an organic fertilizer which is covered under the definition of Fertilizer mentioned above i.e., organic fertilizer is a subset of fertilizer. Thus, anything which increases the fertility of soil is Fertilizer. Since Manure is also used to increase the fertility of soil, the same is also a Fer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th compost with 30Kg and above pre-packed and labelled bags to nurseries who buys for consumption, whether in such cases GST is payable? - HELD THAT:- Since coir pith compost is a fertilizer as explained in para 12.2, Chapter II of the Legal Metrology (Packaged Commodities) Rules, 2011, that is provisions applicable to packages intended for retail sale are applicable to fertilizer even though they are sold in bags up to 50kg. As explained in para 15 supra, nurseries are not covered under 'institutional consumer'. Thus if the applicant supplies coir-pith compost of 30Kg and above which is prepacked and labeled even to nurseries, then it is exigible to GST at 5% (CGST 2.5% and SGST 2.5%) Rule 3(b) of Legal Metrology (Packaged commodities) Rules, 2011, provides that the provisions of Chapter II of that Rules shall not apply to cement, fertilizers and agricultural farm produce sold in above 50 kg bags. Whether the coir-pith compost, which is also the bio-fertilizer, sold by the registered person, falls under this category and exempt from GST? - HELD THAT:- Rule 3(b) of Legal Metrology (Packaged commodities) Rules, 2011 says that these rules are not applicable to packages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acked and labelled bags to nurseries who buys for consumption, whether in such cases GST is payable? v. Whether the nurseries, who are un-registered dealers, come under the definition of Institutional consumers ? vi. If the registered persons sells coir-pith compost with 30Kg and above pre-packed and labelled bags to nurseries who buys for consumption, whether in such cases GST is payable? vii. Rule 3(b) of Legal Metrology (Packaged commodities) Rules, 2011, provides that the provisions of Chapter II of that Rules shall not apply to cement, fertilizers and agricultural farm produce sold in above 50 kg bags. Whether the coir-pith compost, which is also the bio-fertilizer, sold by the registered person, falls under this category and exempt from GST? 4. Admissibility of the application: The question is about the applicability of a notification issued under the provisions of this Act and determination of the liability to pay tax on any goods or services or both and hence is admissible under Section 97(2) (b) and (e) of the CGST Act 2017. 5. BRIEF FACTS OF THE CASE: The applicant furnishes some facts relevant to the issue: 5.1 The applicant states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ementation. At the end of the composting period, the coir pith is changed into a well-decomposed black mass. The C:N ratio is reduced to nearly 24:1 with the N content enhanced from 0.26 to 1.06%. The advantages of coir pith compost over other compost materials are it adds micronutrient to the soil which enhances microbial activity and reduces soil erosion. In addition to the higher moisture content, coir pith compost is known to supply micro and secondary nutrients such as magnesium, sulphur, calcium besides nitrogen, phosphorous and potassium. 5.5.2 Process adopted by the applicant:- Step 1: Uniformly spreading of Ten ton of coir-pith over a flat land. Step 2: Careful mixing of 75kg Urea into Coir-pith so that urea is uniformly covered to entire mass. Step 3: Careful mixing of 100kg Gypsum into coir pith so that Gypsum is uniformly covered to entire mass. Step 4: After proportionate mixing of Urea and Gypsum into coir pith, watering on the surface of the mixed mass will be undertaken. Sufficient moisture should be ensured for speedy decomposition in this composting process. To ensure the moisture content at all times, the mixture will be wetted initially and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es) Rules, 2011 provides that the provisions of Chapter II shall not apply to - (a) Packages and commodities containing quantity of more than 25 kilograms or 25 litres; (b) Cement, fertilizer and agricultural farm produce sold in bags above 50 kilograms; and (c) Packaged commodities meant for industrial consumers or institutional consumers. Thus, they are of the view whether the finished product, i.e, 'coir-pith compost' can be called 'fertilizer' or agricultural farm product since the same is derived from coconut. Secondly, they also sell their produce to some of the 'Industrial consumers' and 'institutional consumers' who use it for themselves. The Registered person wants to know whether in such cases, the produce sold is exempt from tax if the package is less than 25kg or 50kg and mentioned as not for retail sale . 6. Applicant's Interpretation of Law: 6.1 The applicant is of the opinion that the said goods, coir pith compost, if sold in prepackaged and labelled bags of 25 kg and less, it is taxable and if sold in pre-packaged and labelled bags of 30 kg and above, it is exempt, as per notification No.7/2022-Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 9. We have considered the submissions made by the applicant in their application for advance ruling. We have also considered the issues involved on which advance ruling is sought by the applicant and the relevant facts along with the arguments made by their authorized representative and also their submissions made during the time of hearing. 10. The Applicant is engaged in supply of coir pith compost. The Applicant states that he purchases coir pith and then it is mixed with urea and gypsum and then the same is processed and converted into either 'De-composed coir pith compost' or 'Sterilized coir pith compost' which is used as manure for agriculture and horticultural crops. 11. Now we proceed to answer first question. In this regard we invite reference to entry No. 132A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d words , including coir pith compost put up in unit container and bearing a brand name shall be inserted at the end; This entry is again amended vide Notification No.6/2022-Central Tax (Rate), dated 13.07.2022 as below:- B. in Schedule I-2.5%, (xvi) against S. No. 215, in column (3), for the words put up in unit container and bearing a brand name , the words , pre-packaged and labelled shall be substituted; --------------------- -------------------- G. after the Schedule VII, in the Explanation, for clause (ii) and the entries relating thereto, the following clause shall be substituted, namely :- (ii) The expression 'pre-packaged and labelled' means a 'pre-packaged commodity' as defined in clause (I) of section 2 of the Legal Metrology Act, 2009 (1 of 2010) where, the package in which the commodity is pre-packed or a label securely affixed thereto is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder. 12.1 In this regard we invite reference to section 2(1) of The Legal Metrology Act, 2009 which is as below:- (I) pre-packaged commodity mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... get coir pith compost. In view of the definition of organic fertilizer mentioned above and the process adopted by the applicant to manufacture coir pith compost, we can say that coir pith compost is an organic fertilizer which is covered under the definition of Fertilizer mentioned above i.e., organic fertilizer is a subset of fertilizer. The Applicant in his additional submissions has stated that there is difference between fertilizer and organic manure and coir pith compost being organic manure has to be distinguished from fertilizer. Now let us see what the definition of Manure is. 1. As per Tamilnadu Agricultural University website( https://agritech.tnau.ac.in) 'Manures are the organic materials derived from animal, human and plant residues which contain plant nutrients in complex organic forms. Naturally occurring or synthetic chemicals containing plant nutrients are called fertilizers.' 2. As per https: / /www.collinsdictionary.com manure is 'any natural or artificial substance for fertilizing the soil' 3. As per https://www. merriam-webster.com, Manure is a 'material that fertilizes land' Thus from the above definitions we can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is mandatory. 14. Now we proceed to answer fourth question. The Applicant wants to know whether GST is applicable if the registered person sells coir-pith compost in 25 kg and less prepacked and labelled bags to nurseries who buys for consumption. We can see in paragraph 12.1 supra about the Chapter -II of The Legal Metrology (Packaged Commodities) Rules, 2011 which is about provisions applicable to packages intended for retail sale. Rule 3(a) of the same says that these rules are not applicable to packages of commodities containing quantity of more than 25 kg or 25 litre. Since the applicant intends to sell coir-pith compost in bags of 25 kg and less i.e pre-packed and labeled the same is exigible to GST at 5% as per entry No. 215 of Notification No.1/2017-Central Tax (Rate) dated: 28.06.2017 as amended vide Notification No.6/2022-Central Tax (Rate), dated 13.07.2022. 15. Now we proceed to answer fifth question. The Applicant wants to know whether the nurseries, who are un-registered dealers, come under the definition of Institutional consumers . In this regard we invite reference to Legal Metrology (Packaged Commodities) Rules, 2011 which was amended vide Legal Metrology ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom GST. Rule 3(b) of Legal Metrology (Packaged commodities) Rules, 2011 says that these rules are not applicable to packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags up to 50 kg i.e Chapter II of that Rules shall not apply to fertilizers sold in above 50 kg bags and hence they are not exigible to GST if sold in above 50 kg bags. 18. In view of the foregoing, we pass the following RULING i. Entry 132A of Notification No.2/2017-Central Tax (Rate) dated:28.06.2017 as amended by Notification No. 7/2022-Central Tax (Rate), dated 13-07-2022 applies to Coir-Pith Compost other than pre-packaged and labeled. ii. If the registered person sells coir-pith compost in 30 kg and above quantity bags with un-registered brand name SURYA . Then the same is exigible to GST at 5%(CGST @ 2.5% and SGST 2.5%) as per entry No. 215 of Notification No.1/2017-Central Tax (Rate) dated:28.06.2017 as amended further. iii. Coir-pith compost can't be sold without any label in 30kg as label is mandatory for the pre-packed commodities and thus above quantity bags are also exigible to GST at 5%(CGST @ 2.5% and SGST 2.5%) as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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