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TMI Blog2023 (7) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... tion? - HELD THAT:- 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 Distribution System (Maintenance Control) Order, 2013 - Para 3.1 of the Circular No. 153/09/2021-GST dated 17.06.2021 states that Public Distribution specifically figures 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. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- The value of supply for providing milling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 is stated to be engaged in the business of selling flour (atta) and providing service of job work in the nature of crushing food grains supplied and owned by Food Supplies Department, Government of West Bengal. 1.3 The applicant submits that he has entered into an agreement with the District Controller of Food and Supplies, Kolkata, 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. (Foods Supplies Department). 1.4 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred by Section 3 of the Essential Commodities Act 1955 read with the Ministry of Consumer Affairs, Food and Public Distribution Department Order No. G.S.R. 630(E) dated 31.08.2001. It extends to the urban area of West Bengal. 2.3 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 class 33 and 34 of West Bengal Urban Public Distribution System and is in control 2013. Agreement herein means agreement made between the state government and owners of flour mills thereof in accordance with the provision of the said Guidelines, 2017, as defined in Para 2(1)(a) of the said Guidelines. Para 3 deals with empanelment of flour mills whereas para 6 deals with renewal of empanelment. Paragraph 4(2) of the said guideline, 2017 provides that the empanelled flour mill shall not indulge in private milling for commercial purpose except with the prior consent of the state Government. Para 20 of the said Guideline reads as follows: 20. Maintenance of Register and furnishing r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 81. Further Rs. 43/- is realized by selling gunny bags which is used by the State Government for sending gunny bags to the applicant. (g) Therefore, total non-cash consideration is Rs. 124/-. (h) Details of cash and non-cash consideration is as below: - Flour Millers to be paid for crushing of 100 kg of Wheat Cost for of 95 Kg Atta (in Rs.) A Crushing Charges 90.78 B Fortification, Costs 10 C Packing Charges 50 D Transportation Handling Charges 28.7 E Consideration from sale of Bran (4 Rs. 20/Kg (Non-Cash) 80 F Consideration from sale of Refractors (1 Rs. 1/kg) (Non-Cash) 1 G Total (A+ B+C+D+E+F) 260.48 H Less: Non-Cash Consideration I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant has contended that services in the nature of crushing food grains supplied and owned by Food Supplies Department, Govt. of West Bengal is exempt from the levy of GST vide sl. no. 3A of the Notification No. 12/2017- CT (R) dated 28.06.2017. 2.9 The applicant has argued further that the flour is packed in the packing material procured by him and thus he is making a bundled supply of the services of crushing of the grains along with supply of packing materials. They are supplied in conjunction with each other in the ordinary course of business as food grain cannot be transported without proper packing. It is, therefore, a composite supply of goods and services where services of crushing food grains is the principal supply and providing packing materials is ancillary to it. 2.10 The primary condition to be covered under the said entry of exempt supply reads as 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 . Accordingly, it is submitted by the applicant that in the instant composite supply, Value of Supply of Goods = Fortification Charges + Pac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 26, and thus said supply to such person is also entitled for 5% rate. 2.13 On the basis of above-mentioned facts and the provisions of law, the applicant has submitted that the instant composite supply of service by way of milling of food grains into flour to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Alternatively, even if it is assumed without accepting that the aforesaid exemption is not available to the applicants, the services by way of job work in relation to all food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) is taxable at the rate of as 5% (CGST + SGST) vide Notification No. 11/2017- Central Tax (Rate). 3. Submission of the Revenue The officer concerned from the revenue has not expressed any view in this regard. 4. Observations Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorized representatives of the applicant during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. 4.5 Now we take the issue to decide whether this composite supply is made 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. 4.6 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 Distribution System (Maintenance Control) Order, 2013. In this context, we refer to Para 3.1 of the Circular No. 153/09/2021-GST dated 17.06.2021 where it is stated that Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrusted 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; iii) The value of supply of goods in the said composite supply shall not exceed 25% of the value of the said composite supply. 4.11 In Para 3.2 of the Circular No. 153/09/2021-GST dated 17.06.2021 [CBIC-190354/36/2021-TRU Section - CBEC], it has been clarified that 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. 3A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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