In Re : Sardar Mal Cold Storage And Ice Factory
GST
2018 (7) TMI 967 – AUTHORITY FOR ADVANCE RULINGS, RAJASTHAN – 2018 (14) G. S. T. L. 603 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULINGS, RAJASTHAN – AAR
Dated:- 11-6-2018
ADVANCE RULING NO. RAJ/AAR/2018-19/03
GST
MR NITIN WAPA, MEMBER AND SUDHIR SHARMA, MEMBER
For The Applicant : Shri Alok Kothari, Advocate
RULING
SUBMISSION OF THE APPLICANT
1. M/s Sardar Mai Cold Storage & Ice Factory) hereinafter referred to as 'Applicant') submitted an application, seeking an Advance Ruling on the Entry No. 24 of the Notification No. I J/2017 Central tax (Rate) dated 28/06/2017 which at S. No. 24 (i)(i)(e) provides tax rate as 'NIL' for services of loading, unloading, packing, storage or warehousing of agricultural produce as a support services to agriculture, forestry, fishing, animal husbandry.
The applicant seeks advance ruling over the coverage of definition of support services of loading, unloading, packaging, storag
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various products and the process done on those agriculture commodities before the)' come into cold storage. In order to seek advance ruling that whether the goods which comes for storage will come under the definition of agricultural produce or not &whether the supply of Cold Storage services by the applicant Hint 10 various products as mentioned herein below attracts Nil rate of duty or not as per Notification No. 11/2017 Central tax (Rate) dated 28/06/2017. In their support the applicant submitted the details of various products and related processes done on them by the Farmers/Cultivators' traders before the products comes for Storage Purpose.
GROUP-A
Name of goods
Stage at which commodities come for storage and process if any applied by the Farmers/Cultivators/Traders before the products comes for Storage Purpose.
Remarks
1. Fennel
(Saunf)
2. Coriander (Dhaniya) 3. Cumin seeds (Jeera) 4. Carom seeds (Ajwain)
5. Fenugreek Seeds (KasooriMethi Dried)
6. Mustard Seeds (Sarso
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of stones, dust. mud. impurities etc. and the trader who bought the goods and arranges for the cold storage of the goods gels it cleaned prior to storage so that unnecessary storage of waste product should not be done.
The process of cleaning or removing the dust does not change the essential character of the goods in question nor add an marketability. The products remains same before or after remaining dust.
1. That as per the description provided in Column No. 2 there is a clear cut storage ol the agriculture produce and the applicant seeks the advance ruling over the coverage of the goods covered by Column No. 1 under the definition of agriculture produce which is given in die explanation provided at Pi. No. 4(ii) of the Notification No. 11/2017 Central lax (Rate) dated 28/06/2017 and hence attracts “NIL” rate of duty.
2. Thai the applicant will reproduce the sample of the goods at the time of Hearing, before the Bench to explain the contention.
Group-B
Name of goods
Stage at
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duce.
1. That as per the description provided in Column No. 1 there is a clear cut storage of the agriculture produce and the applicant seeks the advance ruling over the coverage ofthe goods covered by Column No. 1 under the definition of agriculture produce which is given in the explanation provided at Pt. No. 4 (vii) of the Notification No. 11/2017 Central tax (Rate) dated 28/06/201″ and hence attracts 'NIL' rate of duly. 2. That the applicant will reproduce the sample of the goods at the time of Hearing. before the Bench to explain the contention.
Group-C
Name of goods
Stage at which commodities come for storage and process if any applied by the Farmers/Cultivators/Traders before the products comes for Storage Purpose.
Remarks
1. Tamarind (Imli)
The Tamarind are primarily produced or cultivated by small farmers who remove the shell or the upper part and bring the inner part (which is the consumable part ofTamarind) for sale. The Tamarind may or may not come for storage with
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uces or grows the product does certain essential processing like washing, drying, cutting so that products become marketable at the end of the farmers.
The cultivators bring these goods in a dry/cut form to the Mandis and thereafter goods are bought by the traders in the same form and shape as it is bought by the farmers to the Mandi. The traders who bought the goods don't process it any further before bringing the goods for storing the goods at cold storage. Thus, the product in questions retains it essential character as agriculture produce.
1. That as per the description provided in Column No. 2 there is a clear cut storage of the agriculture produce and the applicant seeks the advance ruling over the coverage of the goods covered by Column No. 1 under the definition of agriculture produce which is given in (he explanation provided at Pi. No. 4 (vii) of the Notification No. 1 1/20 1 7 Central lax (Rate) dated 28/06/2017 and hence attracts “NIL' rate of duty. 2. That the applicant
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produce and the applicant seeks the advance ruling over the coverage of the goods covered by Column No. 1 under the definition of agriculture produce which is given in the explanation provided at Pt. No. 4 (vii) ofthe Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and hence attracts 'NIL' rate of duty
2. That the applicant will reproduce the sample of the goods at the time of Hearing, before the Bench to explain the contention.
Group-F
Name of goods
Stage at which commodities come for storage and process if any applied by the Farmers/Cultivators/Traders before the products comes for Storage Purpose.
Remarks
1. Groundnuts
(Mungphali)
2. Copra Gola
(Coconut)
Groundnut and coconut as globally known are products with outer shell which has no use. The farmers bring the entire product which includes nut. and its outer shell to the market. The trader only gets the outer shell remove for the convenience of storage of the goods but it can be easily appreciated
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tion No. 1 1/2017 Central tax (Rate) dated 28/06/2017 and hence attracts “NIL” rate of duty.
2. That the applicant will reproduce the sample of the goods at the time of Hearing, before the Bench to explain the contention.
Group-G
Name of goods
Stage at which commodities come for storage and process if any applied by the Farmers/Cultivators/Traders before the products comes for Storage Purpose.
Remarks
1. Dry fruits sueh as Fig(Anjeer).
Almond (Badaam). Walnuts (Akhrot).Pistachio (Pista) . Lotus Seeds Pop (PhoolMakhana) etc.
The product in a question is product with outer shell which has no use. So. removal of outer shell either at the hands of cultivator or at the hands of the trader will never bring any change in its essential character or marketability of the product The goods are always stored in its form without any processing ever done right from the stage of cultivator till storage. The removal of outer shell can never be categorised by any stretch of imagination as a p
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mers/cultivators by the traders. The buyers of the agriculture produce in all the above cases are not carrying out any process leading to change in essential character or enhancing the marketability of agriculture produce which is purchased from the cultivators. Thus, what is stored at the cold storage are primarily an agriculture produce and are covered under the definition of the agriculture produce as defined under explanation- 4(vii) of the Notification No. 11/2017 Central tax(Rate) dated 28/06/2017 and Notification No 12/2017 -Central Tax (Rate) dated 28/6/17 (at point 2(d) of the notification) hence attracts NIL rate of duty as per S. No. 24 of the notification no 11/2017 or S. No 54 of the notification no 12/2017.
5. Applicant's Questions(s) on which Advance Ruling is required
In order to seek advance ruling that, whether all the goods as listed in their application are covered under the definition of agriculture produce as defined under explanation 4 (vii) of the Notificatio
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explanation 4 (VII) of Notification No. 11/2017 Central Tax (Rate) Dated 28-06-2017 and Notification No. 12/2017 Central fax (Rate) Dated 28-06-2017 at para 2 (D) hence attracted nil rate of duty. Further Goods mentioned in Annexure A (Group-B to G) undergo some or other form of processing and would not fall under the 'Agricultural Produce'.
Issues to be decided:
7. The issue involved in this case is. whether the goods as mentioned in Group A to Group G of Annexure A which comes for storage will come under the definition of agricultural produce or not & whether the supply of Cold Storage services by the applicant firm to the goods as mentioned above in the table as Group A to Group G. attracts Nil rate of duty or not as per Notification No. 11/2017 Central tax (Rate) dated 28/06/20172017 and Notification No 12 2017 -Central lax (Rate) dated 28/06/2017
Findings:
8.1. As per Notification No. 11/2017 Central tax (Rate) dated 28/0672017,Sr, No. 24 in the table therein. Central tax o
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ng, 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 b\ a commission agent for sale or purchase of agricultural produce.
(ii) Services by way of pre-conditioning, pre-cooling. ripening, waxing, retail packing. labelling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables.
(iii) 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,
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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 oi' an) 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 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 its use:
(e) loading, unloading, packing, storage or warehousing of agricultural produce:
(f) Agricultural extension services;
Further definition of agr
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ical form/constitution..
(c) Most importantly the processing done should be such as is usually done by a cultivator or producer which should only help it to attain marketability at primary market i.e. the definition limits the scope of processing and allow;s only those activities which helps the produces to attain the condition of its first marketability in primary market. After it attains the condition of first marketability the definition restricts all other further processes on the produce for further sale to be termed as “Agricultural Produce'.
Once the products attains its first marketability for the primary market all other subsequent processes on produce leading to value addition and subsequent sale belong to the realm of secondary market thereon refraining the produce to fall under the category of 'Agricultural Produce' as defined in Notification.
In clarification issue as per circular No. 16/16/2017 GST dated 15-11-2017. issue regarding GST applicability on warehousing of
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xure A are those goods which are being sold by farmers/cultivators in Primary Market.
(b) Are the activities/processing done on these goods as mentioned in Annexure A are of those nature which are usually done by the farmers/Cultivators at farm level or instead are being done by skilled labour by help of certain tools or machines following specific procedures.
(c) Is there a considerable value addition brought about by the processing of goods
8.4 Based on above explanation, goods as per annexure A (Group A to G) are discussed as follows :-
Annexure A (Group A)
Fennel(Saunf), Coriander(Dhaniya), Cumin Seeds (Jeera), Carom Seeds(Ajwain) ,Fenugreek Seeds(Kasoori Methi),Mustard Seeds(Sarson),Bn)vvn Mustard Seeds (Rai),.Nigella Seeds(Kalonji),Poppy Seeds(Posara Dana):
If no further processing is done on above mentioned goods 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 primar
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ssential characteristic. Similarly dates and dry dates also after being sold in primary market go under specific process of sorting, cleaning, drying and polishing which is not usually done by cultivator himself. Hence processed goods mentioned in Group B do not belong to produce which are being sold in primary market and processes involved lead to considerable value addition indicating change in essential characteristics. Hence goods mentioned in Group B do not fall under the definition of “Agricultural Produce'.
Annexure A (Group C)
Tamarind :- Tamarind when harvested from tree consists of brittle outer shell which encapsulates the pulp and enclosed seed which in turn are sold by farmer in primary market. Shelling and removal of seeds to obtain the pulp is usually done by specially designed machines. Hence inner pulp without shell and seeds do not fall under the definition of Agricultural Produce' as it loses its essential characteristics.
Annexure A (Group D)
Dry mango ( S
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Dalehini), Gum (Gond), Arjuna Chaal ( Arjun Chaal) :
Cinnamon (Species) is obtained from the inner bark of a tree, species Genus CTNNANOMUN. Immediately after harvesting the bark has to undergo a spec process involving hammering . scrapping, drying, cutting, fumigation,packing etc. These process are done by skilled labour and nearly accounts for 60% costs of the final product. After harvesting these process are not done by fanners but arc being done by skilled labour at specific plants set up to extract bark from the branches harvested..
Gum (Gond) :- Raw gum is collected by farmers or gum collectors from outer bark o( Acacia tree which after collection is sold in primary market. Later in industrial plants raw gum is cleaned, refined, powered and made in granular form fit to be consumed in foods industries.
Arjuna Chaal ( Arjun Chaal):- Arjuna Chaal is got from tree, Arjun Arminalia. The bark also goes under certain processing before it is fit to be used in Ayurvedic Industries.
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p (Phool/Tal Makhana) etc.
Dry fruits as the name suggests, is obtained by drying of fresh fruits or other plain products. All of them are harvested and sold in primary market by Cultivator as raw and green . These are then purchased by traders and processors who undertake a very specific . time consuming process such as cleaning, deshelling, specialized drying, sorting, grading, packing etc.
Products mentioned in Group G are processed by which the loose their essential characteristics
Hence do not fall under category of Agricultural Produce.
9. In view of the forgoing. we rule as under :-
RULING
Taxability of the supply of Cold Storage services in respect of goods as mentioned under Group A to Group G in the application for Advance Ruling tiled by M/s Sardar Mai Cold Storage & Ice Factory , H-141,142,150, Malviya Industrial Area, Malviya Nagar, Jaipur is as follows :-
1. Goods mentioned under Group A fall under the definition of Agricultural Produce in terms of the aforesai
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