2018 (8) TMI 1073 – AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA – 2018 (16) G. S. T. L. 139 (A. A. R. – GST) – Warehouse services – claim of benefit of exemption – agricultural produce or not – Serial No.54 of Notification No.12/2017 Central Tax (Rate) – Whether the supply of warehouse services used for packing & storage of tea, was/is exempted vide Serial No 54(e) of Notification No. 12/2017- Central tax (rate) or otherwise? – Held that:- Even if we assume that in the beginning they are bringing raw tea leaves or may be semi processed tea leaves which they have not clearly specified to the godown, they are under taking further processing and manufacturing of the same as per processes given above and are finally storing manufactured tea as per details given by them self above which finally culminates into packing of Lipton Pure and Simple 100s tea bags. This activity of M/s. Unilever of processing of raw tea leaves into tea results in emergence of a new product having distinct name i.e.
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No. 354/173/2017-TRU dated 15.11.2017.
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Ruling:- Exemption provided in serial no. 54 to Notification No, 12/2017 Central Tax (Rate) is not applicable to the activity carried by the company. – GST-ARA-30/2017-18/B-38 Dated:- 23-5-2018 – SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by NUTAN WAREHOUSING COMPANY PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the following issues. 1. Whether Exemption provided in serial no. 54 to Notification No. 12/2017-Central Tax (Rate) is applicable to the activity carried by the company? At the outset, we would like to make it clear that the provisions of both the CGST Act and th
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OF AFORESAID QUESTION(S)(i.e.) APPLICANT'S VIEW POINT AND SUBMISSIONS ON ISSUES ON WHICH THE ADVANCE RULING IS SOUGHT) AND AS PER SUBMISSION DT. 10.04.2018 Brief Facts submitted by applicant on 10.04.2018 1. M/s. Nutan Warehousing Company Pvt Ltd (hereinafter referred to as applicant) is a company formed for following main objective a) To carry on the business of warehousing, cold storage and refrigeration in all its branches and activities and sphere. b) To carry on the business of storage of fertilizers, insecticides, quality seed, agricultural and horticultural equipment, tool and machinery. c) To carry on the business of quality seeds and develop quality seeds, acquire suitable lands and carry on agriculture. d) To produce material and fertilisers and insecticides and acquire agency in the above lines and act as commission agents. e) To act as clearing and godowns for proper and safe storing of valuable agricultural and horticultural produce and to provide goods and services o
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rom manufacturers of tea is an agricultural produce as defined in clause 2(d) of the Notification No. 12/2017-CT (Rate) dated 28.6.2017. Further, storage & warehousing of tea post procurement, blending and packing undertaken by M/s Unilever is exempted under E. No. 54(e) of the Notification No. 12/2017-CT (Rate) dated 28.6.2017. 5. Based on this understanding, applicant had neither taken GST registration nor discharged the GST liability. After, insistence from Applicant's client, M/S Unilever, applicant had taken registration and regularly discharging GST liability. 6. As the applicant had a serious reservation regarding taxability of renting of warehouse as the warehouse is used for warehousing of tea, an agricultural produce. Under this background, the applicant had requested for advance ruling on – Whether the supply of warehouse services used for packing & storage of tea, under above mentioned facts & circumstances was/is exempted vide Serial No 54(e) of Notificatio
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laims that the storage and warehousing of tea is exempted vide Serial No 54(e) of Notification No. 12/2017- Central tax (rate). The said entry is reproduced as under 54 Heading 9986 Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of- (a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; (b) supply or farm labour; (c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (d) renting or leasing of agro machinery or vacant land with or
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ess involved in making green leaves marketable in form of tea- Tea leaves are plucked from the tea plants and the green leaves plucked from the tree are not fit for the human consumption and it cannot be sold in the open market for human consumption. The raw tea leaves are withered by exposure in the shadow of the sun or by heating in trays until pliable. Thereafter the leaves are rolled by hand or machine in order to break the leaf cells and liberate the juices and enzymes. Finally, the leaves are completely dried either by further exposure to the sun, over fires, or in a current of hot air then the tea leaves are fermented in baskets, glasses and in clothes. Thereafter the leaves were then subjected to grading with sieves of various sizes. The said leaves are finally roasted with charcoal for obtaining suitable flavour and colour. Thereafter the said tea is packed in the bulk packs. 12. The processing of the tea makes it marketable by minimal process they are made fit for human consu
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present case. a) The produce must emerge from cultivation of plants or rearing of all life forms of animals-Green leaves are plucked from the tea plant. Hence the first condition is undoubtedly fulfilled. b) Either no further processing is done or such processing is done as is usually done by a cultivator or producer on the said produce. 14. Tea leaves are plucked from the tea plants and the green leaves plucked from the tree are not fit for the human consumption and it cannot be sold in the open market for human consumption. The raw tea leaves are withered by exposure in the shadow of the sun or by heating in trays until pliable. Thereafter the leaves are rolled by hand or machine in order to break the leaf cells and liberate the juices and enzymes. Finally, the leaves are completely dried either by further exposure to the sun, over fires, or in a current of hot air then the tea leaves are fermented in baskets, glasses and in clothes. Thereafter the leaves were then subjected to grad
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or the purpose of saving the tea-leaves from perishing, making them fit for transporting and marketing them. The process applied was minimal. Withering, crushing and roasting the tea-leaves will be surely necessary for preserving them. The process of fermentation or final roasting with charcoal for obtaining suitable flavour or colour and also the process of grading them with seives were all within the region of minimal it no point of time it crossed that limit and robbed the tea-leaves, the agricultural produce, of their character of being and continuing as such substantially. These processes are normally done by the cultivator or the producer, hence the second ingredient is also satisfied. 17. The process undertaken does not alter its essential characteristics. The tea leaf remained what it always was. It was tea leaf when selected and plucked and it continued to be tea leaf when after the process of withering, crushing and roasting it was sold in the market. The process applied was
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Uttaranchal High Court in case of Dehradun Tea Company Ltd. vs State Of Uttaranchal And ors. [2006 148 STC 56 Uttra) (Annexure-2). 19. C(ii) The processes undertaken makes it marketable for primary market. The process undertaken is seen from the submission on record. it is not repeated herein it is the not direct activity link with cultivation. 20. Circular cannot override the Notification. Notifications are issued using the subordinate legislative power and are tabled in parliament. Circulars are issued for clarifying the issue, which had been dealt in the Act/rule/notification in a legal language. Circulars are issued by authority expressing their view point. It cannot override the Notification. Any circular contrary to the law (including notification) is non est in the eye of the law. It is neither binding on the department nor on the Assessee. The applicant intend to rely on the five member Hon'ble Supreme Court decision in case of CCE Bolpur Vs Ratan Melting & Wire Industr
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y for passing the appropriate order. Addition submission by Applicant dated on 11.05.2018. Please refer to our application reference No. 30 dated 23.2.2018 in respect of which, hearing was held before you on 24.4.2018 and our earlier letter dated 3.5.2018 on the above subject. During the hearing, we were directed to submit documents/data from M/s Unilever Export, Pune within ten days from the date of hearing. Accordingly, M/s Unilever Export had been requested to submit the same. We are pursuing the matter with the M/s Unilever Export. However, we are yet to receive the complete reply as M/s Unilever Export are in a process of shifting their activity from our premises to Dubai. It is therefore requested to grant us some more time to submit the same. Accordingly, the detail process was submitted on record is considered while passing of order. Hence it is not repeated again here. 03. CONTENTION – AS PER THE CONCERNED OFFICER Submitted on this issue A. The submission, as reproduced verbat
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loading, packing, warehousing etc. and that any issued in the past to the contrary of Service Tax or Vat/SaIes Tax is no more relevant. Applicant have obtained online Service Tax Registration No. AAACN7084LST001 on 29.06.2005 for providing Taxable Service under the category of Storage and Warehousing Services. They are providing services in the nature of Warehousing and storage viz. storing Tea Bags (manufactured)in various format such as Service Sachet, Sqeezables, Herbals, Infusion, Flavoured Tea, Packet Tea and blended tea and receiving consideration on account of Warehousing charges, Service Charges, Lease Rent, other charges and Transport charges from M/s. Unilever India Exports Ltd. 100% EOU. Further applicant vide their letter date 13.10.2017, 15.12.2017 02.02.2018 informed this office that they are providing warehousing services 100% EOU viz. Unilever India Export Ltd and the warehoused goods Tea is agricultural produce hence the services provided by them are exempted as Per O
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y of the service recipient is to be discussed as under. The definition of Agriculture Produce as per Section 65B (5), for the purpose of clause (102) of 65, w.e.f. 01.07.2012 in Service Tax is as under *Agriculture produce means any produce of agricultural on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes marketable for primary market The Definition of agricultural produce for the purpose of Sr.54 of Notfn No. 12/2017 in GST is as under- agricultural produce means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator producer which does not alter its essential characteristics but makes it marketable for primary market; On going thr
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he status of applicant is Service Provider and received consideration for providing services as mentioned in Answer to Question No. 14. The Tea stored in 100% EOU is manufactured packed in bags in the factory and exported, and the exemption is applicable only to the agriculture produce which are marketed in primary market therefore the exemption claimed by the applicant is not applicable As per the balance sheet,the service wise income received from M/S. Unilever India for the period 2013-2014 to 2015-2016 is as under – Category of service provided 2013-2014 2014-2015 2015-2016 Warehousing charges 2979264 3507604 55000 Service charges 19440003 19059D984 23037450 Lease Rent 8947365 7572675 8883305 Other charges 340920 167280 559320 Transport charges 11310000 3069800 6288000 Zero copies of extract of Note 14 of Balance Sheet for 2013-2014 to 2015-2016 and Zerox copy 26AS for the years 2015-2016 and 2016-2017 enclosed as Anne. IV The Legal provision in respect of service provided to EOU b
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duce after 01.07.2012 and nature and category of service recipient is not considered while filling application under Advance Ruling. The definition of Agricultural produce as defined under Section 65B (5), for the purpose of clause (102) of Section 65, w.e.f. 01 .07.2()12 in Finance Act, 1994 is as under: agricultural produce means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market; Further Board vide Circular No. 16/16/2017-GST issued under F.No.354/173/2017-TRU dated 15.11.2017 clarified that the green tea leaves is a agricultural produce but tea is a processed product made in tea factories after carrying out several process on green tea leaves hence
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18 which is much later than the action initiated by deptt. for investigation. It is also noticed that the Registered office of the applicant as per Service Tax Registration is at Krishi Bhavan, 1379, Bhavani Peth, Pune- 411042 falling under the jurisdiction of Swargate Division. However, the applicant has willfully shown the address of Registered office at the time of GST Registration as Krishi Bhavan, 1379, Bhavani Peth Pune 411002 by quoting wrong PIN code falling under Shivajinagar Division to mislead the deptt. Thus the applicant, by mentioning the wrong Pin Code as 411002 instead of 411042 for the same address in GST Registration, the applicant has tried to mislead the deptt. for hiding the evasion made in past period from 01/07/2012 to 30.06.2017 with intention to make the loss to the Govt. exchequer. Applicant vide letter dated 19.03.2018 reported that the enquiries by various officers were conducted and enclosed copies of correspondence but not enclosed the copies of decision o
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ce Tax/ GST/ Foreign Trade Policy while taking the decision on the application as evasion of tax made by the applicant involves revenue of more than Rupees One Crore. Additional submission by Jurisdictional Officer dated 21.05.2018 The applicant requires advance ruling on two issues viz.- a) Whether exemption provided in Sr.No.54 (e) to Notfn No. 12/2017-CentraI Tax (Rate) is applicable to the activity carried out by the company? b) Applicability of Exemption for the activity of providing Services in the nature of warehousing for loading, unloading, packing, storage or warehousing of agriculture produce? Issue No. 1 – In this issue, the assessee is asking whether exemption provided in Sr.No.54 to the Notfn No. 12/2017-C.T. (Rate) is applicable to the activities carried by the company. In this connection it is submitted that the applicant has warehouse facilities which is rented to M/s. Unilever India Export Ltd. for storing manufactured tea which is ultimately exported and hence this m
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not exemption from payment of service tax/GST. ii) High Court Decision in the case of Brook Bond Lipton India Ltd. Vs State of Karnataka 109 STC 265 in which it was stated that packing led to value addition for the purpose of excise and sales tax and that it was a possible view that packaged blended tea produced in the Industrial unit of the appellant is a manufactured product in which packing material are inputs. The contents of the exemption in Sr.No.54 of Notfn No. 12/2017 dated 28.06.2017 are as under Sr. 54 -Services relating to cultivation of plants and rearing of all life forms of animals, except the reading of horses, for foods, fibre, fuel, raw material or other similar products or agricultural produce falling under Chapter 9986 by way of- (a) to (d) (e) Loading, unloading, packing, storage or warehousing of agricultural produce (f) to (g) As per GST Tariff, the services classified under group 9986 is as under SUPPORT SERVICES TO AGRICULTURE, HUNTING, FORESTRY, FISHING, MININ
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ion provided in Sr.No.54 (e) to Notfn. No. 12/2017-CentraI Tax (Rate) is applicable to the activity carried out by the company can be answered in the Nagative. 5. ISSUE No.2- The Second issue on which applicant sought Advance Ruling is Applicability of Exemption for the activity of providing Services in the nature of warehousing for loading, unloading, packing, storage or warehousing of agriculture produce The propriety of the asking Advance Rulling in respect of this Question is not understood since from the facts described by the applicant in his application, it appears that he is only storing tea manufactured by M/s. Unilever India Export Ltd, which is branded and packed and ready for distribution for tertiary market which is mainly 100% export market. Therefore the question posed by the applicant may be answered in Negative since the applicant is not providing Services in the nature of storage and warehousing for agriculture produce as envisaged at Sr. No.54 (e) to the Notfn. No. 1
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ore the sale of tea effected by him was exempted from sales tax under the proviso to the Act. The Sales Tax authorities rejected the assesee 's contention. Decision-While giving decision High Court held that sales of tea leaves were not exigible to sale tax. The commodity which was sold was not different from the commodity therefore the proviso to Sr.2 (i) of the Act is attracted. The decision given in the above case is relating to exemption from payment of sale Tax allowed to Agriculturist of Tea, whereas in applicant's case, the applicant is providing Services to the manufacturing Tea unit registered as 100% EOU, hence the same decision is not applicable as the tea is manufactured goods classified under CSH 0902 under Head Tea whether or not flavored (other than unprocessed Green Tea Leaves attracting CGST -2.5%, SGST -2.5% and IGST -5% in GST Tariff. b) Uttaranchal High Court in the case of Dehradun Tea Company Ltd Vs. State of Uttaranchal and ors. dated 26.06.2006 ISSUE -Wh
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Wire Industries Issue-Departmental Clarification vis-a-vis court Decision Binding nature of Circulars Contrary to Statutory Provisions having no Existence in law Decision-wherein it has been held that a circular which is contrary to the statutory provision has really no existence in law. It is for the court to declare what the particular provisions of Statute Says and it is not for the Executive. Since CBECs Circular is in consonance with the provision of CGST/SGST Act, the ratio of Ratan Melting and Wire Industries is not applicable in the facts of applicant's case. On going through the letter dated 11.05.2018 submitted by the applicant to Advance Ruling Authority along with the letter of M/s. Unilever Export dated 9.7.2014 mentioning the details of manufacturing activities, it appears that the applicant is providing various services to the manufacturing unit, whereas the exemption claimed by the applicant is applicable to support services provided to Agriculture, hence applicant
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licant is already going on and therefore their application is required to be rejected. Further he was requested to produce documentary evidences in respect of initiation of investigation at the earliest. The applicant was also requested to submit their contentions and written submissions in this regard. The application was admitted and called for final hearing on 24.04.2018, Sh. Suresh Singh C.A along with Sh. Chanshayam L Navalakha, Director and Sh. Bhushan Patil, C.A. appeared and written submissions and orally contended as per their written submissions. They were orally to give details of exact nature of product that was being stored, including photographs of the product, sample of bags in which it was stored along with markings or details of manufacturer on the bags stored and also a brief note on the nature of product from M/S. Hindustan Lever, including details of suppliers from whom M/S. Hindustan Lever had purchased the products. They were also requested to give sequential deta
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any or not? The Notification 12/2017 is reproduced herein below. 54 Heading 9986 Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of- (a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; (b) supply of farm labour; (c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun dryings fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (e) loading, unloading, packing, storage or warehousing of
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as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market; In view of the above, we are required to ascertain if the goods being stored by M/s. Unilever India Export Ltd., in the warehouse of applicant would fall in the definition of 'Agricultural produce' as given above. To ascertain the exact nature of goods being stored in warehouse. we find that a letter received by the applicant from M/s. Unilever dated 09.07.2014 gives the details about the exact nature of goods being stored by them. We find that the letter gives the details of product being stored by them which as mentioned as being Lipton Pure and Simple IOOs Tea Bags. Further details of products are as under- 1. Lipton Pure and Simple 100s Tea Bags 2. Ingredient : Black Tea 100% 3. Manufacturing Process : Blending of tea and Packing 4. Shelf Life of Finished Goods : Two years 5. Package : 100 Tea bags per unit carton. 12 cartons in outer
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on machine chute having Mesh and Magnetic Grid 5000 Gauss Strength. 12. Filling tea into Tea bags on Constanta Machine 13. Auto filling of Tea bags into Inner carton Online Quality checks for Tea bag Quality 14. On line Lid closing of Inner carton 15. On line Laser Coding on Inner carton 16. On line over wrapping of Inner carton 17. Packing into Outer Shipper End of line Quality checks and Inspection 18. 100% inspection of Each Inner Unit Pre dispatch clearance 19. Storage of Cleared Stock 20. Stuffing FG stock into container Container Inspection, Sealing of container 21. Despatch To Port for sailing Photographs From the perusal of above activities provided by M/s. Unilever including photographs of manufacturing process as above as well as photographs of manufactured goods being stored by them, it is crystal clear that even if we assume that in the beginning they are bringing raw tea leaves or may be semi processed tea leaves which they have not clearly specified to the godown, they a
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scussed. However, the decision of Income Tax Appellate Tribunal, Kolkatta in the matter of Narendra Tea Co. (P) Ltd Vs. Assesse dated 20/07/2017 is a direct authority on the issue. In this case on reference by Division Bench, Special Bench was constituted and following question was referred for consideration and the decision. 1. Whether, on the facts and in the circumstances of the case, the Assessees, who are in the business of blending & processing of tea and export thereof, can be said to be Manufacturer/Producer of the tea for the purpose of Section 10A/10B of the I.T. Act, 1961? 37. Accordingly, we answer the question referred in favour of the assessee by holding that the assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s. 10B of the Act. Further, assessees who are in the business of blending and processing of tea in respect of undertakings in free
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