In Re: Taranjeet Singh Tuteja & Brothers
GST
2018 (11) TMI 661 – AUTHORITY FOR ADVANCE RULINGS, CHHATTISGARH – 2018 (19) G. S. T. L. 122 (A. A. R. – GST), [2019] 64 G S.T.R. 179 (AAR)
AUTHORITY FOR ADVANCE RULINGS, CHHATTISGARH – AAR
Dated:- 10-10-2018
STC/AAR/05/2018
GST
SHRI S.K. BUXY AND SHRI RAJESH KUMAR SINGH, MEMBER
PROCEEDINGS
[U/s 98 of the Chhattisgarh Goods & Services Tax Act, 2017 (herein- after referred to as CGGST Act, 2017)]
The applicant M/s. Taranjeet Singh Tuteja & Brothers, Opp. Savitri Rice Mill, Sahdeopali, Tehsil-Pussore, Dist Raigarh (C.G.) 496001 (GSTIN-22AABFT3379G1ZA) has filed the application U/s 97 of the Chhattisgarh Goods & Services Tax Act, 2017 requesting advance ruling regarding tax liability in the business of job work activity of custom milling of paddy involving milling activity, transportation of rice and usage charges of gunny bags.
2. Facts of the case:-
I. M/s. Taranjeet Singh Tuteja & Brothers, Opp. Savitri Rice Mill, S
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Nagrik Apurti Nigam/Food Corporation of India for which too MARKFED pays transportation charges.
V. Besides, this in consideration of this custom milling job work of paddy, the applicant receives milling charges and incentive as decided by the State Government of Chhattisgarh.
VI. In the aforesaid process initially gunny bags are provided by MARKFED to the applicant along with the paddy and thereafter consequent to milling, on delivery of such milled rice in gunny bags, some gunny bags gets retained with the applicant. For such balance gunny bags which gets retained by the applicant, MARKFED withholds some amount from the applicant while settling the bills relating to custom milling of applicant. In case the balance gunny bags are returned back, MARKFED refunds the withheld amount partially if such gunny bags are taken again by the applicant for another job work of custom milling and otherwise refunds the full withheld amount relating to such gunny bags.
VII. In some cases, if appli
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ary co-operative societies/paddy storage center to the place of miller (applicant's place)
On per K.M. basis as fixed by the Sate Govt. of Chhattisgarh.
2.
Custom milling charges of paddy
@10/- Per Qtl. of paddy as milling charged + @30/- to @45/- (प्रोत्साहन राशि)
3.
Transportation of rice from the place of miller (Applicant's place to the delivery center of Nagrik Apurti Nigam/ F.C.I.
On per K.M. basis as fixed by the Sate Govt. of Chhattisgarh.
4.
Usage charges of gunny bags
@3.75/- per bag or as fixed time to time by the MARKFED.
3. Contention of the Applicant :-
The applicant has mentioned following details regarding rice milling and its transportation as per the contract with MARKFED –
I. On the issue of service of transportation of paddy/rice the applicant submits that this activity of service is exempted under Sr.No. 21 and 18 of Notification no. 12/2017(State/Central).
II. On the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ritten submission dated 05.09.2018, which has been taken on record.
The applicant reiterated their contention that (a) on the issue of service of transportation of paddy/rice the applicant submits that this activity of service is exempted under Sr.No. 21 and 18 of Notification no. 12/2017(State/Central). (b) on the issue of service of custom milling of paddy the applicant states that the rate of tax on milling charges of paddy should be 5% (2.5% SGST +2.5% CGST) under Notification no. 31/2017-CT(R) Notification no. 11/2017-CT (Rate) dated 28-06-2017 Serial No. 26. (c) The incentive as decided by the State Govt. of Chhattisgarh and given by the MARKFED should be considered as subsidy and not be included in taxable value under Section 2(31) of the CGST Act 2017 and should not be included in consideration of milling charges. (d) The Rate of tax on usage charges of Gunny Bags should be taxable at 5% GST as applicable on supply of gunny bags.
Two exempt supplies i.e. transportation of pad
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
AABFT3379G1ZA, the applicant is seeking clarity with regard to the applicable rates for payment of GST in relation to custom milling job work service, service of transportation of paddy/rice, usage charges of gunny bags and incentive received by the applicant as paid by the MARKFED.
6. The legal position, Analysis and Discussion:-
6.1 The provisions for implementing the CGST Act and CGGST Act, 2017 are similar. Now we sequentially discuss the provisions that are applicable in the present case.
6.2 The applicant M/s. Taranjeet Singh Tuteja & Brothers has shown four different supplies as per the conditions of the contract with the MARKFED in which the amount is received for three service supplies and one goods' supply, the following being the three service supplies involved:-
i. Milling of paddy – On the issue of service of custom milling of paddy the applicant states that the rate of tax on milling charges of paddy should be 5% (2.5% SGST +2.5% CGST) under Notification no. 31/2017-C
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
n-making and in terms of co-operation and competition within a larger institutional structure).
'Subsidy'
A subsidy is a benefit given to an individual, business or institution, usually by the government. It is usually in the form of a cash payment or a tax reduction. The subsidy is typically given to remove some type of burden, and it is often considered to be in the overall interest of the public, given to promote a social good or an economic policy.
iv. Thus it gets amply clear from the above that the subsidy is related with State welfare of the public or it is provided to a person or a business by various Government, Non Government agencies, to rationalise the cost impact directly/indirectly on the public. On the other hand the incentive is provided to a specific person or business for recognition of noble work or to provide motivation for a specific work. The applicant has mentioned about 'incentive' amount apart from the milling charges for custom milling as per the contract w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ndment Notification No. 31/2017, issued Notification No. F-10-82/2017/CT/V(146), dated 13-10-2017 the amount received from transportation of rice/paddy would be exempt supply, provided only if any registered person is involved in the business of transportation work, In this case the applicant has entered into a contract with MARKFED mainly for custom milling. The custom milling job involves the transportation of paddy from various paddy collection centers of MARKFED to the rice mill station of the applicant and transportation of rice from rice mill to Civil Supplies Corporation Units in the same contract. The amount received from the compensation of packing material gunny bags during transportation and the job work of custom milling are also the inseparable part of the job of milling work. In this way all the supplies are interrelated and can in no way be vivisected in the said contract, the primary and principal work being custom milling of paddy.
(b) For such supplies CG GST Act sp
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
osite and mixed supplies:
The tax liability on composite or a mixed supply shall be determined in the following manner, namely:-
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;
Thus it is clear from the above provisions that the service supply of custom milling by the applicant to the MARKFED is principal supply. As per section 8(a) all the receipts of principal supply, being composite supply, would attract 5% GST including the amount received from the transportation of paddy and rice.
(c) Under composite supply, two or more taxable supplies and amount of exempt supply cannot be severed or artificially vivisected. In this context, the following provisions of CGGST Act is also squarely applicable here :
Section-2(47):-. “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
The said supply involved here cannot be separated from the tax computation of composite supply. Thus as per the provision of composite supply under section 8(a) of Chhattisgarh GST Act 2017, we come to the considered conclusion that the custom milling of paddy being the principal supply (predominant supply) involved in the case in hand, the same would attract GST (2.5% CGST and 2.5% SGST).
In view of the deliberations and discussions as above, we pass the following order:-
ORDER
(Under section 98 of the Chhattisgarh Goods and Services Tax Act, 2017)
No.STC/AAR/05/2018
Raipur Dated 10/10/2018
The ruling so sought by the Applicant is accordingly answered as under:-
As per Agreement No: AC112017410015 Dated 16.11.2017 with Chhattisgarh State Marketing Co-Operative Federation Limited, the applicant has been allotted the principal job work of Custom Milling of Paddy for manufacturing of rice, along with custom milling they will also get the payment towards the transportation
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =