2018 (11) TMI 661 – AUTHORITY FOR ADVANCE RULINGS, CHHATTISGARH – 2018 (19) G. S. T. L. 122 (A. A. R. – GST) – Liability of GST – supply of goods as well as service – composite supply – business of job work activity of custom milling of paddy involving milling activity, transportation of rice and usage charges of gunny bags – Held that:- The transportation of paddy and rice are conditionally exempted under specific Notifications. All supplies would be treated as exempted supply only when the transportation works would be given full and unconditional exemption under corresponding Notification. On account of conditional exemption, the supplies involved in the instant case in hand would be exigible to tax.
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The part-exemption as sought by the applicant for the service supply of transportation of paddy and rice is not eligible to them, the same being under a false premise – The said supply involved here cannot be separated from the tax computation of composite supply – the custom mi
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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, Sahdeopali, Tehsil-Pussore, Distt – Raigarh (C.G.) (hereinafter referred to as the applicant) has executed an agreement for custom milling of paddy with the Chhattisgarh State Marketing Co-operative Federation Limited, Raipur (C.G.) having GSTIN – 22AAAAC0934E1ZJ (here-in-after to be referred a MARKFED) on dated 16-11-2017 for execution of custom milling of paddy. i.e. Production of rice on job work. II. In the execution of job work of custom milling, applicant has to collect / procure paddy from Primary Co-operativ
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. 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 applicant provides their own gunny bags to the MARKFED at the time of taking delivery of paddy (applicant does not execute job of packing of paddy in gunny bags), charges for usages of gunny bags (supply of tangible goods) is given by the MARKFED. VIII. As per the guidelines of Chhattisgarh custom milling order, 2016 and letter no. F-4-6/Food/2016/29/2436, dated 23-10-2017 of Department of Food, Civil Supplies and Consumer Protection, Mantralay, Raipur, a Contract no. AC112017410015 has been executed on 16-11-2017 (Thursday),
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isgarh. 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 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. III. 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. IV. The Rate of tax on u
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8-06-2017 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 paddy, rice and incentive amount should be individually computed while determining composite supply for the job work of rice milling and packing materials gunny bags supply. According to section 8(a) which defines composite supply, two or more taxable supplies attracts tax liability. No tax liability should be charged on the amount received from other exempt supply as per their contract. Thus, the applicant has highlighted two major points, thereby opining that the amount received on account of job work of rice milling and supply of packing mate
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mp; 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-CT(R) Notification no. 11/2017-CT (Rate) dated 28-06-2017 Serial No. 26. ii. Transportation of paddy and rice – the applicant submits that this activity of service is exempted under Sr.No. 21 and 18 of Notification no. 12/2017(State/Central). As per the notifications issued under the provisions of State GST Act, the above mentioned both the supplies are acceptable as individual supplies. III. Incentive for custom milling of paddy – The applicant has requested to consider the incentive amount as exempted, citing it as subsidy. Whereas, the appl
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blic 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 with the MARKFED. This contract nowhere mentions about the I subsidy . Subsidy necessarily is extended in the larger interest of public at large. The contention of the applicant regarding the tax liability on the incentive amount erroneously assuming the same to be as subsidy, claiming treatment of such amount received as incentive for the services supplied, as exempt supply is not sustainable under law and merits rejections Thus the tax liability on the considerations received for such supply of services received is to be charged @5% GST as per the Notific
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pplies 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 specifically provides as under :- Section-2(30):- composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; Secti
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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 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply; Section-2(108) : – taxable supply means a supply of goods or services or both which is leviable to tax under this Act; On the basis of above provisions it gets abundantly clear that the transportation work by a registered person with commercial purpose under the provisions of GST Act and as per the issued relative Notifications are taxable supplies. The transportation of paddy and rice are conditionally exempted under specific Notifications. All supplies would be treated as exempted supply only when the
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/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 of paddy & Rice, usage of gunny begs for packing of Rice and incentives as an additional charge for custom milling. There being a single contract for all above supplies of goods & services and as the said contract comprises of two or more supplies (i.e. transportation, supply of packing material & incentives) and one of which is principal supply i.e. custom milling of paddy, it shall treated as composite supply as per section 2(30) of Chhattisgarh GST Act 2017 and as per the provision of section 8 (a) of Chhattisgarh GST Act 2017. Accordingly the tax liability on a composite supply shall b
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