In Re : M/s RARA UDHYOG
GST
2018 (7) TMI 884 – AUTHORITY FOR ADVANCE RULING – RAJASTHAN – 2018 (14) G. S. T. L. 616 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING – RAJASTHAN – AAR
Dated:- 23-6-2018
RAJ/AAR/2018-19/06
GST
Nitin Wapa (Member) and Sudhir Sharma (Member)
Present for the applicant : Shri Alok Kumar Kothari, Advocate
RULING
(A) SUBMISSION OF APPLICANT
That the applicant is engaged into the activities of cleaning of the various Agriculture produce like Saunf (Fennel) Dhaniya (Coriander), Jeera (Cumin seeds), etc. or the like goods which are brought to them by the farmers or by the traders.
That the agriculture produce contains dust particles, certain small pieces of stones, dust, mud and other impurities etc. The applicant is having cleaning plant and they remove the various impurities but do not change the essential character of the agriculture produce but make the product marketable for primary market.
2. The relevant headings and definition re-
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arm 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;
(iv) Entry No. 55 of Notification No 12/2017 -Central Tax (Rate) dated 28/6/17:
Carrying out an intermediate production process as job work in relation 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.
(v) The explanation provided at pt. 4 (vii) of the notification 11/2017 Central tax (Rate) dated 28/06/2017 or definition (d) at point 2 of the Notification No 12/2017 -Central Tax (Rate) dated 28/6/17 defines agriculture produce as:
“agricultural produce” means any produce out of cultivation of plants and rearing of all life forms of animals, except
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ifications discussed above.
4. The contentions of the applicants also get support from the Education guide of Service Tax where under Section 66D of the Finance Act 1994 the various processes including cleaning on agriculture produce were covered under the negative list. Hence, no Service Tax was levied on the applicant firm on the cleaning activity under the erstwhile Finance Act 1994. Reference is made to the point 4.4.6 of the Education guide (as reproduced at below paragraphs at pt. 6).
Therefore, alternatively activity of cleaning may also be covered by Entry S. No. 24 (i)(i)(c) of Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and Entry No. 54(c) of Notification No 12/2017 -Central Tax (Rate) dated 28/6/17 attracting NIL rate of duty.
5. Further the point 4.4.6 alternatively also clarifies “Shelling of paddy would not be covered in the negative list entry relating to agriculture as this process is not done on a farm but in a rice shelling unit normally located aw
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thority excluding the following extent they are not covered elsewhere,-
[(i) * * * * ]
(ii) Services in relation to an aircraft or a vessel, inside or outside the port or an airport;
(iii) Transport of goods or passengers; or
(iv) [Any service], other than services covered under clauses (i) to (iii) above, provided to business entities;
(b) Services by the Reserve Bank of India;
(c) Services by a foreign diplomatic mission located in India;
(d) Services relating to agriculture or agricultural produce by way of,-
(i) Agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or [ * * * ] testing;
(ii) Supply of farm labour;
(iii) 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 ch
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culture” means the 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;
(4) “agricultural extension” means application of scientific research and knowledge to agricultural practices through farmer education or training;
(5) “agricultural produce” means any produce of agriculture 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;
[Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017]
Rate of GST on intra-State supply of specific services with Service Code Tariff (SAC)
In exercise of the powers conferred by sub-section (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Governmen
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t 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) process es 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 without a structure incidental to its use;
(e) loading, unloading, packing, storage or warehousing of agricultural produce;
(f) agricultural extension services ;
(g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commis
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interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of heading 9988.
(iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that.-
(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and
(b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.
(v) 'Information technology software” means any represent
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ing in force for the purpose of regulating the marketing of agricultural produce.
[Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017]
Exemption from CGST on specified intra-State services
In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said fable, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:-
TABLE
(1)
(2)
(3)
(4)
(5)
SI. No.
Chap
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ng, unloading, packing, storage or warehousing of agricultural produce;
(f) agricultural extension services ;
Nil
Nil
55.
Heading 9986
Carrying out an intermediate production process as job work in relation 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.
Nil
Nil
2. Definitions.- For the purposes of this notification, unless the context otherwise requires,-
(a) “advertisement” means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person;
(b) “Advocate” has the same meaning as assigned to it in clause (a) of sub-section (1) of section 2 of the Advocates Act, 1961 (25 of 1961):
(c) ''Agricultural extension” means application of scien
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11/2017 Central tax (Rate) dated 28/06/2017 attracting NIL rate of tax .
2. Whether the activity of the applicant (as discussed at pt. 15 below) covered by Entry S. No. 54(c) or Entry No. 55 of Notification No 12/2017 -Central Tax (Rate) dated 28/6/17 attracting NIL rate of tax.
Personal Hearing (PH)
In the matter personal hearing was given to the applicant and accordingly Shri Alok Kumar Kothari, Advocate, appeared as representative of applicant for personal hearing on 11.05.2018. During the PH he reiterated the submissions already made in the application for Advance Ruling submitted on 27.03.2018.. He requested that the case may be decided as per the above submission made earlier.
FINDINGS :
1. The Jurisdictional Officer in his/her comments has stated that the activity of cleaning is not being carried out at agriculture farm but at special cleaning plant installed away from agricultural farm .Further it is stated that cleaning activity cannot be defined as intermediate producti
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y states that exemption is available only on those processes which are carried at Agriculture Farm and which do not change the essential characteristics of the Agricultural Produce but only make it marketable for primary market .i.e. first marketability.
4. It limits the processing only to that extent which makes it marketable for primary market. Hence all other processes which are done after acquiring the stage of first marketability fall outside the scope of above clause.
5. Secondly and most importantly processes undertaken on agricultural produce such as 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, should be carried out at Agricultural Farm i.e. all given processes must necessarily be undertaken at Agriculture Farm only then it would attract NIL rate under GST.
6. Applicant M/S Rara Ud
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or agricultural produce. ”
9. The activity of mechanized cleaning does not fall under intermediate production process as job work in relation to cultivation of plants. Intermediate production process as job work in relation to cultivation of plants usually relates to agricultural operations directly related to production of any agricultural produce such as cultivation, harvesting, threshing, plant protection, testing, and supply of farm labour etc., carried out at agricultural farm.
Hence the activity of mechanized cleaning at an installed plant is not covered under the above clause too and does not attract NIL rate of Tax.
7. In view of the foregoing, we rule as under,
RULING
The activity of the applicant i.e. M/s Rara Udhyog, Jaipur is not covered by Entry S. No. 24 (i)(i)(c) or S. No. 24(i)(iii) of Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 AND Entry S. No. 54(c) or Entry No. 55 of Notification No 12/2017 -Central Tax (Rate) dated 28/6/17 & will not attract N
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