Case Law Details
In re PR Flour Mills Pvt Ltd (GST AAR West Bengal)
This article analyzes the case of PR Flour Mills Pvt Ltd in West Bengal, focusing on the value of supply of services for the conversion of wheat provided by the State Government into atta/fortified atta. The main question addressed is the determination of the applicable tax rate for this supply. The analysis delves into whether the supply qualifies as a composite supply and if it relates to functions entrusted to a Panchayat or Municipality. Additionally, it assesses whether the value of goods exceeds 25% of the total supply value, which impacts the eligibility for exemption under the GST Act.
Analysis: The applicant has entered into an agreement with the District Controller of Food and Supplies, Government of West Bengal, for the supply of fortified atta. This supply involves the conversion of wheat into atta/fortified atta. To assess the applicable tax rate, it is crucial to determine if this supply qualifies as a composite supply and if it is related to functions entrusted to a Panchayat or Municipality.
According to the definition in clause (30) of section 2 of the GST Act, a composite supply involves two or more taxable supplies of goods or services bundled and supplied together, with one being the principal supply. In this case, the milling services provided by PR Flour Mills Pvt Ltd constitute the principal supply, as they are integral to the conversion process.
To establish if the supply is related to functions entrusted to a Panchayat or Municipality, the agreement between the applicant and the State Government is examined. The agreement is executed in accordance with relevant guidelines and orders governing the Public Distribution System. Based on these provisions, the supply can be deemed to be in relation to functions entrusted to a Panchayat under article 243G of the Constitution.
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