In re Shree Krishna Roller & Flour Mills (GST AAR West Bengal)
West Bengal Authority for Advance Ruling (AAR) examined the GST implications on the conversion of wheat into fortified atta under a contract with the State Government for distribution through the Public Distribution System (PDS). The applicant, Krishna Roller & Flour Mills, provides milling services but does not take ownership of the wheat or atta. The ruling primarily focused on determining the value of supply, applicable GST rate, and components to be included in the valuation under Notification No. 2/2018- Central Tax (Rate).
The applicant argued that its services fell under an activity entrusted to a Panchayat under Article 243G of the Constitution, making them eligible for GST exemption. Relying on Circular No. 153/09/2021-GST, it claimed that if the value of supplied goods in a composite supply exceeded 25%, the applicable GST rate would be 5% under Entry 26 of Notification No. 11/2017- Central Tax (Rate). The State Government paid Rs. 179.48 per quintal for the service, with Rs. 43 deducted for gunny bags retained by the applicant as non-monetary consideration. The applicant also retained by-products like bran and refraction, which were sold in the open market.
Regarding admissibility, the AAR considered whether a pending Directorate General of GST Intelligence (DGGI) inquiry barred the advance ruling application under Section 98(2) of the CGST Act. Referring to the Telangana High Court’s decision in M/s Srico Projects Pvt. Ltd. vs. Telangana State Authority for Advance Ruling (2022), the AAR held that an inquiry does not constitute a “proceeding” under the Act unless it involves specific adjudication. Since no show-cause notice or demand order had been issued, the AAR admitted the application.
