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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 ..... ply of coir pith compost. The Applicant states that he purchases coir pith and then the same is processed and converted into either 'Decomposed coir pith compost' or 'Sterilized coir pith compost' which is used as manure for agriculture and horticultural crops. 3. The applicant has sought advance ruling in respect of the following questions:- i. Whether Notification No. 7/2022-Central Tax (Rate), dated 13-07-2022 applies to Coir-Pith Compost (HSN 53050040) mentioned in serial number 132-A of the Notification No.2/2017-Central Tax (Rate) dated 28-06-2017 as amended vide notification No. 19/2018-Central Tax (Rate), dated 26-07-2018? ii. 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? iii. If the coir-pith compost in 30kg and above quantity bags are sold without any label (in plain bags), whether would it attract GST? iv. If the registered person sells coir-pith compost in 25 kg and less prepacked and labelled bags to nurseries who buys for consumption, whether in such cases GST is payable? v. Whether the nur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame in unit container and bearing a registered brand name or bearing brand name in which an actionable claim or enforceable right in a court of law available or to claim exemption when such right for an actionable claim or enforceable right is foregone completely) so as to make it exemption only to those which are "other than pre-packaged and labelled". They submit that the coir-pith compost with pre-packaged and labelled is taxable and other than the pre-packaged and labelled is exempt from tax. 5.4 The applicant states that they sell the product ("De-composed coir-pith compost" and "sterilized coir-pith compost") to both industrial consumers and institutional buyers and in some cases to retail buyers. 5.5. The applicant states the process adopted in producing coir-pith compost as follows 5.5.1 Processing of 'Coir-pith compost' from 'Coir-pith': Coir-pith contains constituents like lignin (30%) and cellulose (26%), which do not degrade quickly but can be decomposed by employing the Gypsum powder with urea supplementation. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r five times its weight and thereby when applied to soil increase the water holding capacity of soil. 5.6 The applicant states that, having purchased coir pith (which is brownish in colour) from registered and un-registered dealers, it is converted into either 'De-composed coir pith compost' or 'Sterilized coir pith compost' which is black in colour. The 'Coir-pith' thus undergoes the process of de-composition and becomes 'coir-pith compost' and exempt from tax. 5.7 The applicant states that presently they are selling these products in 30kg and above quantity pre-packaged and labelled bags. Hence the same is not liable for GST as provided under the notification No. 7/2022-Central Tax (Rate), dated 13th July 2022, read with relevant provisions of the Legal Metrology Act, 2009 and The Legal Metrology (Packaged Commodities) Rules, 2011. Thus, they are not levying and collecting GST on these produce. However, Rule 3 (Chapter II) of the Legal Metrology (Packaged Commodities) 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6.7 The applicant submits that the coir-pith compost is a 'fertilizer' and also 'agricultural farm produce' as provided under Rule 3(b) of Chapter II of Legal Metrology (Packaged Commodities) Rules, 2011. In such cases, the applicant to get exemption from GST as per notification number 7/2022-Central Tax (Rate), dated 13-07-2022, needs to sell the goods in 50kg above pre-packaged and labelled bags. 6.8 The applicant states that there is difference between fertilizer and organic manure and coir pith compost being organic manure has to be distinguished from fertilizer. The applicant has requested to keep this in view and issue the advance ruling. PERSONAL HEARING / PROCEEDINGS HELD ON 18-08-2022 7. Sri Y.C. Shivakumar, Advocate and Duly Authorised Representative appeared for personal hearing proceedings held on 18-08-2022 and reiterated the facts narrated in their application. FINDINGS & DISCUSSION 8. At the outset we would like to make 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2009 (1 of 2010) and the rules made thereunder.". Thus 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 labelled. 12. Now we proceed to answer second question. 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. In this regard we invite reference to entry No. 215 of Notification No. 1/2017-Central Tax(Rate) dated:28.06.2017 amended by Notification No. 18/2018-Central Tax(Rate) dated:26.07.2018 and the same is reproduced below:- (A) in Schedule I - 2.5%, (iv) in S. No. 215, in the entry in column (3), the comma and 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 labell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified in Schedule III and Organic fertilizers specified in Schedule IV; (oo) "Organic fertilizer" means substances made up of one or more unprocessed material (s) of a biological nature (plant/animal) and may include unprocessed mineral materials that have been altered through microbiological decomposition process; The Process adopted by the applicant in manufacturing coir pith compost is narrated in detail in para 5.5.2 supra. The Applicant states that coir pith compost is manufactured by mixing coir pith with required amount of urea and Gypsum and watering the same for speedy decomposition; that the mixture will be kept for decomposition process for a period of 10 to 12 months till the colour changes from brown to black and then they 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 orga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation given to 'pre-packaged and labelled in Notification No.6/2022-Central Tax (Rate), dated 13.07.2022 which is reproduced in para 12 supra. 'Pre-packaged and labelled' means a 'pre-packaged commodity' (as defined in clause (1) of section 2 of the Legal Metrology Act, 2009) 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 and the rules made thereunder. Thus, if the Applicant sells coir-pith compost pre-packed in 30kg and above quantity bags without label also it is taxable (as explained in para 12 supra) since it is already prepacked and bearing a label 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as explained in para 12.2 supra, 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%) as explained in para 12 supra. 17. Now we proceed to answer seventh question. The Applicant wants to know whether coir pith compost sold in bag above 50kg is exempted from 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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