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TMI Blog2024 (9) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... tood in common parlance. Rejected Damaged paddy is altogether a different class. Rejected Damaged paddy is the one which can t he consumed by human beings as it is not fit for human consumption - it would not fall under seed quality. Therefore, appropriately it should be placed under HSN 1006 10 90. Applicability of S No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017 - HELD THAT:- It is an exemption notification and goods placed under this notification are wholly exempt from GST. At S.No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017, it is, 1006 Rice (other than pre-packaged and labelled) . It is quite clear from the explanation of pre-packaged/labelled food items vis-a-vis S.No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017, that Rice (Other than pre-packaged/labelled) should be of food quality and it must be fit for human consumption for being exempt. But Rejected Damaged Paddy in the instant case fails to fulfil these basic characteristics of being fit for human consumption. Rejected /damaged paddy has lost its food quality and human consumption, value. As per appellant, rejected/damaged paddy is to be used in Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), dated 28.06.2017. (ii) Determination of liability to pay tax on supply of rejected paddy sale. (iv) As the rejected paddy is further categorized based on its usage such as Animal Feed, Cattle Feed. Poultry Feed, Industrial use, Manure ete. Would it make any differential classification under each category from the GST perspective based on Harmonized System of Nomenclature? (v) If answer to above is affirmative, then provide the HSN classification GST rate based on usage separately. 4. Advance Rulings: The Authority for Advance Ruling vide Order dated 31.10.2022 gave advance ruling as under- (a) Rejected paddy seed would merit classification under chapter heading 100610, subject to the compliance of the stipulations and conditions as mentioned in the Section note and chapter note specified therein. (b) The exemption from whole of tax as provided under Sr. no 70 of Notification no. 02/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no. 07/2022-Central Tax (Rate) dated 13.7.2022 is not eligible for supply of Rejected paddy/ Damaged paddy for the reasons as discussed above. (c) Rejected paddy / Damaged paddy per se supplied by the applicant, procured by them alth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022. (v) Hence, the rejected paddy is covered under HSN 100610 and also eligible for exemption under HSN heading 1006. (vi) The only question which needs to be addressed is that when will be the rice classified as pre-packaged and labelled and when as other than pre-packaged and labelled which is governed by the clause (l) of Section 2 of the Legal Metrology Act, 2009. (vii) AAAR, Uttarakhand in case of M/s Sam Overseas vide order No. 08/18-19 dated 30.03.2019 has ruled that rejected paddy is covered under HS Code-10061010 and is exempt therein vide Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017. 7. Personal Hearing: Keeping with the established principles of natural justice, a virtual personal hearing in the matter was granted to the appellant initially on 1904.2023. Accordingly. Shri Shubham Jain. CA Shri Deepak Kumar Jain, CA, the authorized representative of the appellant appeared virtually and reiterated their contention as submitted in their application dated 13.12.2022. However, the order could not be issued as both the earlier members of the AAAR got transferred and new members joined the offices. Hence, a personal hearing in the matter was again granted to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Damaged paddy is altogether a different class. Rejected Damaged paddy is the one which can t he consumed by human beings as it is not fit for human consumption. As discussed above, it would not fall under seed quality. Therefore, appropriately it should be placed under HSN 1006 10 90. Held accordingly 8.6 Now, we come to examine the applicability of S No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017. It is an exemption notification and goods placed under this notification are wholly exempt from GST. At S.No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017, it is, 1006 Rice (other than pre-packaged and labelled) . 8.7 For proper understanding of the term labelled pre-packaged, the FAQs released by the Tax Research unit(TRU)of the Department of Revenue, Ministry of Finance on 17.07.2022 is helpful. Clarification at S.No.2 of Table under Para 2 of FAQ dated 17.07.2022 deals with What is the scope of pre-packaged and labelled for the purpose of GST levy on food items like pulses, cereals, and flours? wherein exemption from tax has been clarified specifically on rice, which in general parlance means that such rice is fit for human consumption. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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