Case Law Details
In re Ganga Kaveri Seeds Pvt Ltd. (GST AAAR Telangana)
Appellants are in the business of production and sale of agricultural seeds. In the process of production, the applicant outsources certain services such as cleaning, drying, grading and packing to the job workers and stores the seeds in various facilities after processing them. In the process they also transport the seeds by engaging a GTA. The applicant filed an application before the lower authority for a ruling on their activities with reference to exemption / taxability under Goods and Services Tax Act. Since, the ruling of the lower authority was pronounced against the interests of the applicant, they filed the present appeal before this authority.
This authority observes that the whole gamut of dispute is around exemption contained in the two Notifications i.e. No. 11/2017-CT(R), dt. 28.6.2017 and No. 12/2017-CT(R), dt. 28.6.2017. Both the notifications have defined “agriculture produce” as 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.
The appellant contends that their activities falls under the definition of ‘agriculture produce’, and hence, they are eligible for exemption under the above two notifications. As against this contention, the lower authority held that the activities are outside the purview of definition of ‘agriculture produce’ and hence, no exemption is available to the applicant.
Hence, it becomes imperative to analyse the definition of ‘agriculture produce’. The primary factory which needs to be understood is that to get into the bracket of agriculture produce for claiming exemption, the main condition is that either no processing is done on the produce 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.
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Corrected: Above clearly says that seed is also treated as agriculture produce. However some draw their own interpretations to harass the business people.
1) S No 24 of 11/2017 or S No 55 of 12/2017
2) S No 456 of classification of services
3)Explanatory Notes Service Code 998611: Support services to crop production
This service code includes
i. services to improve the propagation quality of the seed, including
treatment of genetically modified seeds; removal of non-seed materials,
undersized, mechanically or insect-damaged and immature seeds; removal
of seed moisture to a safe level for seed storage; drying, cleaning, grading
and treating of seeds to be marketed;
Above clearly says that there seed is also treated as agriculture produce. However some draw their own interpretations to harass the business people.
1)S No 24 of 11/2017 or SNo 55 of 12/2017 Exemption Notification: 9986: (i) Support services to agriculture, forestry,
fishing, animal husbandry.
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.
2) S No 456 of classification of Services
998611: Support services to crop production
3) Explanatory Notes to the classification of services :99861 Support services to agriculture, hunting, forestry, and fishing
998611 Support services to crop production
This service code includes
i. services to improve the propagation quality of the seed, including treatment of genetically modified seeds; removal of non-seed materials,
undersized, mechanically or insect-damaged and immature seeds; removal of seed moisture to a safe level for seed storage; drying, cleaning, grading and treating of seeds to be marketed;
(Only educated illiterates can pass such stupid judgements)
Seed Processing Service is exempted under notification No 12/2017 and the chapter heading is 998611. Ruling was given without going through the notification and explanatory notes to the codes list
State level AAAR must be abolished. Then what is the meaning of one nation one tax. People are approaching to AAARs due to confusion. National level one AAAR must be formed .
The firm should then reorganize the business – pre chemical treatment and post chem treatment. Pre Chen treatment will then be exempt.
The way law has been written and interpreted in glass chambers is absurd. There has to be a change the way law is written – interpretation, today, has become narrower and strict. For GST – Value Stream Mapping of the activities should be created – which will further help clarify position of law and avoid split hair discussion. it will focus more on aiding economic development rather than just compliances and unhappy entrepreneurs..
If the government really wants to promote agriculture in the country, it should come forward to exempt production and sale agri. seeds from levying GST.