In re Mariegold Industries Private Limited (GST AAR West Bangal)
Introduction: The Authority for Advance Rulings (AAR) for the state of West Bengal has recently dismissed a case involving Mariegold Industries Private Limited. The dismissal wasn’t due to the intricacies of the Goods and Services Tax Act of 2017 (GST Act), but rather because of the applicant’s “lack of interest and absence of relevant records.” Mariegold Industries sought clarity on several key points related to GST, particularly in their agreement with the West Bengal government for the supply of fortified atta. However, despite multiple opportunities, the company neither appeared in the hearings nor provided the relevant records for review.
Context and Business Engagement: Mariegold Industries Private Limited is engaged in the business of converting wheat into fortified atta. This atta is then supplied through the Public Distribution System (PDS) by the West Bengal Government. Their agreement covers a variety of considerations like Crushing Charges, Fortification Costs, Packing Charges, and Transportation & Handling Charges.
Issues Raised: The applicant had approached AAR with two primary questions:
- Whether the additional cost for transporting food grains in the hilly areas of Darjeeling would be considered as ‘composite supply’?
- If considered separate, would such transport costs be exempt under specific notifications of the GST Act?
Lack of Participation: After initial communication and scheduling for hearings, Mariegold Industries expressed their inability to attend due to family medical emergencies and sought adjournment. Even after rescheduling, the applicant failed to appear or send an authorized representative. This clearly indicated a lack of interest in resolving the issues they themselves had raised.
Implications: By not participating, Mariegold Industries misses out on an official advance ruling that could have provided clarity on their GST liabilities. This lack of clarity might have future financial repercussions for the company.
Role of AAR: AAR is a body that offers advance rulings to clarify tax liabilities, and its role is not to chase applicants for responses. The absence of relevant records and the applicant’s consistent non-attendance led AAR to conclude that it couldn’t provide any advance ruling.
Conclusion: The case of Mariegold Industries Private Limited serves as a cautionary tale for businesses seeking advance rulings on GST matters. An advance ruling is not just a right but also a responsibility. Failing to participate actively in the process can lead to missed opportunities for legal and financial clarity. In this case, the AAR rightly disposed of the application without any pronouncement, leaving Mariegold Industries in a cloud of uncertainty regarding their GST obligations.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL
1.1 At the outset, we would like to make it clear that the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression „GST Act‟ would mean the CGST Act and the WBGST Act both.
1.2 The applicant Mariegold Industries Private Limited submits that he is inter alia engaged in business of providing job work service of crushing wheat provided by the State Government, into fortified atta for supply through Public Distribution System by the State Government. The applicant has entered into an agreement with the Food and Supplies Department, Kolkata, Government of West Bengal for supply of fortified atta. According to the said agreement, the applicant uses the food grains owned by the State Govt. (Food & Supplies Department) for crushing and processing it into flour. The applicant transports the flour (atta) packed in the manner as the state Govt. requires by fortifying the crushed grain to the distributor for distribution through the Public Distribution System (PDS) by the State Govt. (Foods & Supplies Department).
1.3 The applicant receives a fixed monetary consideration for the above service provided to the State Government in form of Crushing Charges, Fortification Cost, Packing Charges, Transportation & Handling Charges and also non-cash consideration of gunny bags on per quintal basis.
1.4 Further, as the applicant is located in the hilly areas of Darjeeling and the milling process is done at the place of business of the applicant, he has to transport the food grains owned by the State Govt. (Foods & Supplies Department) from the Food Corporation of India (‘FCl’) warehouse to his place of business where milling process is carried out. To transport the food grains in the hilly areas of Darjeeling, the applicant has to incur additional cost which is compensated by the State Govt. (Food & Supplies Department) by way of additional consideration on kilometre basis specified as per the agreement.
1.5 The applicant has filed this application under sub section (1) of section 97 of the GST Act and the rules made there under seeking advance ruling on the following issues:
