Aakash Food Products Private Limited (GST AAR West Bengal)
1.1 At the outset, we would like to make it clear that the provisions of 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 company is a flour miller, engaged in providing services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System. It is submitted that the ownership of wheat or atta is never transferred to the applicant company.
1.3 The applicant has made this application under sub section (1) of section 97 the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:
I. What is the value of supply of services provided by the applicant to the State Government?
II. What is the rate of tax applicable on the value of supply? What components are to be included in calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018 – Central Tax (Rate)?
1.4 The aforesaid question on which the advance ruling is sought for is found to be covered under clause (b) and (c) of sub-section (2) of section 97 of the GST Act.
1.5The applicant states that the question raised in the application has neither been decided by nor is pending before any authority under any provision of the GST Act.
1.6 The officer concerned from the Revenue has raised no objection to the admission of the application.
1.7 The application is, therefore, admitted.
2. Submission of the Applicant
2.1 The applicant submits that he has entered into a contract with the Governor of the State of West Bengal represented by the District Controller of Food & Supplies (hereinafter referred to as, the State Government) for conversion of wheat provided by the State Government and owned by the State Government, at all times, into wheat meal atta and fortify it by premixing of micro nutrients containing Iron 60 grams, Folic Acid 1.5 grams and Vitamin A for distribution by the State Government through Public Distribution System (for brevity, PDS), as entrusted under the Eleventh Schedule of the Constitution of India.
2.2 The applicant states that under the aforesaid contract, he shall obtain stock of wheat from the State Government. The ownership of wheat remains with the State Government and the applicant is required to convert the wheat into atta by way of crushing and mixing other ingredients as mentioned in Para 2.1 above. The contract also stipulates that the applicant shall pack the fortified atta into poly pouches of 500 grams, 750 grams or 1 kilogram each in properly levelled poly-packs having thickness of 40 microns or above and will deliver the stock to the M.R. Distributors as nominated by the State Government for distribution to the consumers, immediately after the process of crushing.
2.3 The applicant states that he is entitled only to the conversion cost of wheat into atta as applicable and the contract specifies that the out turn ratio of atta will be minimum of 95% per quintal of wheat allowing refraction of 1% for cleaning and 4% for de-branning to the maximum. The refraction and bran generated in the process of conversion of wheat into flour, is not collected by the State Government and there is no mention of the fate of these waste products anywhere in the contract. The applicant submits further that if the State Government however, asks for the bran and refraction any time then he has no right whatsoever to retain the products.
2.4 The applicant submits that he is only engaged in the processing/ crushing of wheat into atta which involves mixing some ingredients as stated earlier which are incidental to the process of conversion of wheat into fortified atta. The applicant also incurs expenses towards purchases of the said ingredients and packaging material as referred to in the contract.
2.5 The applicant submits that during the process of conversion of wheat into atta, by duly mixing the ingredients mentioned in para 2.1 above, two types of wastes are generated, namely bran and refraction which are retained by him and sold in the open market at the prevailing market rates which is generally around @ Rs 20/- per kg for bran and @ Re 1/-per kg for refraction.
2.6 The applicant submits that for conversion of wheat into atta/ fortified atta, he charges Rs 179.48 per quintal from the State Government which comprises of following charges:
