In re Rajiv Gandhi Centre for Aquaculture (GST AAAR Tamilnadu)
From the note furnished on the Artemia Project, it is seen that Cysts and biomass are harvested, processed, Packed and traded. It is stated that artemia cyst cannot be consumed with outer shell/chorion as such; cyst are incubated in sea water with light and aeration; tiny microscopic artemia nauplii comes out from cyst after 15-20 hrs and this nauplii is the feed for fish.
14.4 The appellant has stated that the judgment of the Hon’ble Calcutta High Court reported in 2010 (256) E L T 358 (Cal) relied in support by the appellant is a later judgment which in fact considered the decision of the Mumbai Bench decision before making their observations as pointed out to direct the authorities to follow their observation and decide the case is more apt and squarely applicable to the case of the appellant on account of which the contrary finding recorded by the advance ruling authority touching the classification of the subject goods need to be vacated in the interest of justice. This contention of the appellant also does not have any merit for the following reasons. Classification of goods once finalized by the Apex Court is to be applied to the said product as long as there is no change in the tariff entry/facts of the case. Further, with the advent of GST, the ‘Exemption 86 Effective Basic and Additional Customs Duty for specified goods falling under Chapters 1 to 98’ are provided vide Notification no. 50/2017-Cus dated 30.06.2017. In the said notification, Artemia cyst’ at S.No 13 is said to fall under CTH 0511 91, while Artemia at Sl.No. 14 is classified under 05119911. Going by the entries in the notification, it is abundantly clear that artemia cyst/biomass is squarely classifiable under CTH 0511 only.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, TAMILNADU
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
The subject appeal is filed under Section 100(1) of the Tamilnadu Goods 86 Services Tax Act 2017/Central Goods 86 Services Tax Act 2017 (hereinafter referred to ‘the Act’) by M/s. Rajiv Gandhi Centre for Aquaculture, 3/197, Poompuhar Road, Karaimedu Village, Sattanathapuram-609 109, Sirkazhi Taluk, Nagapattinam District, Tamil Nadu (hereinafter referred to as ‘the appellant’). The appellant is a Society registered under the Tamil Nadu Societies Registration Act and is functioning under the Marine Products Export Development Authority, Ministry of Commerce 86 Industry, Government of India. The appeal is filed against the Order No.9/AAR/2019 dated 23.01.2019 passed by the Tamilnadu State Authority for Advance ruling on the application for advance ruling filed by the appellant.
2. The appellant has stated that presently their operations are carried out in Andaman 86 Nicobar Islands, Kerala and Andhra Pradesh in addition to Tamil Nadu and their operations could be extended to other states of India also. The main activities carried over by them are:
(a) Research and Development for general public
(b) Providing Consultancy Service with respect to Marine Service
(c) Testing Services (All types of testing services) with respect to agriculture and marine products
(d) Training the Farmers, Entrepreneurs, Self- help groups, Students, Hatchery owners etc.
(e) Sale of Fish, Crab (all kinds of seeds)
(f) Sale of Harvest- Fish
(g) Sale of Artemia-Fish Feed (production and sales)
They are registered vide Registration No. 33AAATR6368Q1ZT under GST. However, since they are registered under Section 12A of the Income Tax Act they entertained a view that none of the their above activities could be made liable for the payment of the GST and consequently they may not be required to be registered under GST law at all. They filed an Application (GST ARA-01) with the Tamil Nadu Advance Ruling Authority (hereinafter referred to as ‘the learned TNARA’) seeking advance ruling on the following questions:.
1. Considering the nature of transactions carried out by RGCA and various exemption notification(s) under GST Laws whether RGCA is required to register under GST Laws?
2. If no registration is required for RGCA, whether compulsory registration u/s 24 is required to be made against any of the provisions of Section 24?
3. If so, whether separate registration is to be taken from all the states where the offices of RGCA is situated? Explain the procedure to obtain registration
4. If registration is required to be made, what are the tax rates applicable to the transactions of RGCA?
5. Since RGCA-Head office is having GST Registration (Migrated from TNVAT) at Tamil Nadu only other various project sites are located at different states but doesn’t having the GST registration so far, If they want to purchase materials through interstate from Mumbai to its one of the branch at Kerala, how the purchases of the materials to be made and what are the documents to be carried for the transport of such purchased goods under GST?
3.0 The Original Authority has ruled as follows:
1. The applicant, RGCA is liable to be registered under Section 22 of CGST and TNGST Act.
2. RGCA shall obtain registration in every such State or Union territory in which he is so liable.
3. The rate of tax for various supplies of goods and services supplied by RGCA are :
a. Fish seeds, prawn/shrimp seeds supplied by RGCA, classifiable under 0301, are exempt from CGST under Sl. No.18 of Notification No.2/2017-C.T. (Rate) dated 28.06.2017 as amended and from SGST under Si. No.18 of Notification No.II(2)/CTR/532(d-5)/2017 vide G.O. (Ms) No. 63 dated 29.06.2017 as amended.
b. Live fish supplied by RGCA, classifiable under 0301, are exempt from CGST under Sl. No.19 of Notification No.2/2017-C.T. (Rate) dated 28.06.2017 as amended and from SGST under Si. No.19 of Notification No.II(2)/CTR/532(d-5)/2017 vide G.O. (Ms) No. 63 dated 29.06.2017 as amended.
c. Artemia cysts supplied by RGCA, classifiable under 0511, are taxable at 2.5% CGST under Sl. No.21 of Notification No.1/2017-C.T. (Rate) dated 28.06.2017 as amended and at 2.5% SGST under Si. No.21 of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended.
d. Research and development activities of RGCA are towards breeding, developing new species, genetic testing of Seed and adults of diversified aquaculture species, Gene sequencing for confirmation of species, under SAC 9981,are taxable at 9% CGST under Si no 18 of Notification No 11/2017 dt 28.06.2017 as amended and 9% SGST under S1 no 18 of Notification No .II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended.
e. Consultancy services of RGCA are towards nursery technology, cage farming hatching etc. which are support services for rearing of fish,crab, prawn , etc. and are directly related to operations ,classifiable under SAC 9986, are exempt from CGST under Si no 54 of Notification No 12/2017 dt 28.06.2017 as amended and exempt from SGST under Si no 54 of Notification No.II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as amended
f. testing for pathogens of soil, water, feed etc. and chemical analysis of water and soil and Gene sequencing of pathogens, classifiable under SAC 9983, by at 9% CGST under Si no 21 of Notification No 11/2017 dt 28.06.2017 as amended and 9% SGST under Sl no 21 of Notification No .II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended.
g. training services of RGCA to farmers, hatcheries which are support services for rearing of fish ,crab, prawn , etc. and are agricultural extension services covered under SAC 9986 and hence are exempt from CGST under Sl no 54 of Notification No 12/2017 dt 28.06.2017 as amended and exempt from SGST under Si no 54 of Notification No.II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as amended
h. The training activities of RGCA to students, academia who are not directly involved in rearing of fish, aquaculture etc. are covered under SAC 9992 and taxable at 9% CGST under Si no 30 of Notification No 11/2017 dt 28.06.2017 as amended and 9% SGST under Si no 30 of Notification No .11(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended.
4. The present appeal is against the ruling under Sl.No. 1, 3 (c ), 3(d), 3(f), 3(h) and the stand taken by the ARA that no ruling is provided for the question relating to the document under which the purchases from other states are to be covered as not covered under Section 97(2) of the CGST Act.
5. Prima facie, the appellant submitted that they received the impugned order on 18.03.2019 and therefore there is a delay of 13 days in filing this memorandum of appeal in view of the provisions of Section 100 of the CGST Act, 2017. They filed a separate Petition praying for con-donation of the above short delay in filing this appeal in terms of proviso to Section 100(2) of the said Act explaining the facts and circumstances which caused the delay in filing the appeal. They have stated that their clerical staff who received the impugned order did not bring the same immediately to the notice of the management without realising its importance and implication and incorrectly assuming that the appeal period is 60 days as in the case of Service Tax provisions and brought the fact of receipt of the said order to the notice of the appropriate higher officer only in the third week of April 2019 and as they being controlled by the government, they had to process the file to obtain necessary approval. They have further stated that they have a very fair chance to succeed in the appeal preferred by them. They have relied on the decision of Hon’ble Supreme Court of India in the case of Esha Bhattachajee Vs Managing Committee of Raghunathpur Nafar Academy and others[(2013) 12 SCC 649] wherein it is stated that such delay is required to be condoned in the interest of justice. They have prayed that this learned Appellate Advance Ruling Authority may be pleased to take this appeal on record condoning the short delay and render justice.
6. On merits of the case, they have furnished the following as grounds of this appeal:
a. The learned TNARA ought to have noted that sustainable technologies mean the technologies which meet the needs of the present without compromising the need of future generations to meet their own needs and hence the sustainable technologies on one hand caters the need of the present without affecting the environment so that the environment is sustained and developed for the future generations and hence appellant’s goal of providing sustainable technologies in aquaculture is only meant for preservation of environment. Had the learned TNARA noted the above, while not disputing that the appellant is registered as body as no-profit no loss basis under Section 12AA of the Income Tax Act, would have ruled that the appellant is eligible for the exemption provided under sl.no.1 of Notification No.12/2017-CT (Rate) failure of which had resulted in the erroneous ruling being record in their case which requires to be modified.
b. The learned TNARA ought to have noted that when they have not disputed thereby accepting that Artemia cysts are artemia, also called brine shrimp, is a species of crustacean and cysts are eggs of the shrimp from which larvae hatch which is in turn used as aquatic feed, the product is classifiable only under chapter 23 and such a classification cannot be denied by citing Note to Chapter 23 because the said Note is inclusive one as it does not exclude any animal feeding from heading 2309 but only includes the animal feeding obtained by processing vegetable or animal material to such an extent that they have lost the essential characteristics of the original material. In other words, heading 2309 includes not only the vegetable or animal material which have lost the essential characteristics in the process but also the vegetable or animal materials which have not lost the essential characteristics in the process as long as they are animal feed. Since, admittedly the impugned Artermia cysts is aquatic feed, the same is rightly classifiable under heading 2309. The learned TNARA ought to have noted and followed the decision of the Hon’ble Calcutta High Court in Atherton Engineering Co. Pvt. Ltd. Vs. UOI [2010 (256) ELT 358] holding that ‘ I am of the opinion that if an embryo is within an egg and it is subsequently incubated in controlled temperature and under hydration, the larvae which are subsequently born do not assume the character of any different product but remain in nature and characteristics the same product or organism which is within the egg. Therefore, if the eggs did contain an embryo they could he classified as feeding materials for prawns and ought to have been so classified. These embryos may not be proper prawn feed at the time of importation but could become so, after incubation. Refusing to classify the product as prawn feed on this basis is not reasonable. In deducing the above principle, I have taken a lot of guidance from the case of ‘Commissioner of Income-tax. v. Venkateshwara Hatcheries (P.) Ltd. reported in (1999) 2371TR 174 (S.C.) (Supra)’. Had the learned TNARA noted the above facts and followed the above decision of the Hon’ble Calcutta High Court, they ought to have seen that the impugned Artemia cysts are exempt from CGST vide sl.no.102 of Notification No.2/2017- CT (Rate) and from TNGST under the corresponding Notification as aquatic feed including shrimp feed and prawn feed’.
c. The learned TNARA ought to have noted that the term agriculture covers not only cultivation of land and growing crops but includes animal husbandry, raising of livestock, etc. The very fact, Govt. of India, Ministry of Agriculture enacted Coastal Aquaculture Authority Act, 2005 and the Regulatory Authority was created under this Act, which deals with improvement of Aqua farmers in shrimp farming and fisheries. This confirms that aqua farming by farmers is integral part of agricultural production’ as has been held by the Hon’ble Tribunal in Suryog Agro Poultry Products P. Ltd. Vs. CC [2015 (335) ELT 350) and the Hon’ble Supreme Court in Maheshwari Fish Seed Farm Vs. TNEB [(2004) 4 SCC 705], as approvingly quoted in [2007 (5) STR 1611], holding that ‘A reading of the judgment shows a research by looking into several authorities, meaning assigned by dictionaries and finding out how the term is understood in common parlance. The Court held that the term ‘agriculture’ has been defined in various dictionaries both in the narrow sense and in the wider sense. In the narrow sense agriculture is the cultivation of the field. In the wider sense it comprises of all activities in relation to the land including horticulture, forestry, breeding and rearing of livestock, dairying, butter and cheese-making, husbandry etc.’, the TNARA would have noted that the activities of the appellant viz., (a) Research and development activities undertaken by the appellant are technology development for breeding and farming of new/alternative species with high commercial value viz. fish, prawn, shrimp, crab etc., (b) Testing services provided by the appellant in testing for pathogens of soil, water, feed etc. and chemical analysis of water and soil and (c) Testing services provided by the appellant in testing seed (babies) and adults of diversified aquaculture species viz., fish, prawn, crab etc. and gene sequencing of spices are eligible for exemption from GST vide entry No.54 of Notification No.12/2017-CT (Rate) covering the services relating to rearing of all forms of animals, except horse, for food’ since the above activities are undisputedly for rearing of live marine species like fish, prawn, shrimp and crab etc.
d. The learned TNARA ought to have noted that the appellant training the students and academia by imparting theoretical training in best farming methods of diversified aquaculture species is for equipping them in dissemination of the training knowledge to the field level for use by the farmers, fishermen etc. in application of the scientific research and knowledge in aqua farming and hence the said training is eligible for the exemption provided vide sl.no. No.54 of Notification No.12/2017-CT (Rate) read with clause (I) thereto.
e. The learned TNARA ought to have noted and followed the order of the Commissioner (Appeals), Guntur vide Order-in-Appeal No.GUN-EXCUS-000-0165-16-17 dt.30.01.2017, the appeal against which filed by the department was rejected by the Hon’ble CESTAT vide Final Order No. A/31014-31035/2018 dt. 20.08.2018, holding that the appellant’s ‘activity of research and development of aquatic farms and dissemination developed techniques to the field aptly falls under the scope of definition of ‘agricultural extension’ and thereby falls under negative list vide 66D(d)(vi) of the Act’ and noting that the definition of the term ‘agricultural extension’ vide definition (c) in Notification No.12/2017-CT
f. Had the learned TNARA seen the motto and activities the appellant as a whole instead of vivisecting the activities in the spirit of Section 8(a) of the CGST Act and the above Order-in-appeal of the learned Commissioner (Appeals) which has attained finality, they ought to have concluded keeping in view the motto and activities of the appellant, the fact the appellant is a Society registered for carrying out the policies and programs of the Government in marine products development and the fact that the appellant is registered as charitable organization registered under Section 12AA of the Income Tax Act running on no profit-no loss basis, that the appellant arc eligible for the exemption provided under Sl.no. I of Notification No.12/2017-CT (Rate). The learned TNARA ought to have further noted and followed the above Order in-appeal, which has attained finality, and consequently held that the appellant are not liable to pay GST under reverse charge mechanism (RCM) in respect of consultancy service received by them from abroad and consequently ought to have held that the appellant are not required to compulsorily register under Section 24 (1) (iii) of the CGST Act.The learned TNARA therefore ought to have noted that none of activities of the appellant including the ones which are ruled to be not liable to GST, the appellant are not liable to be registered under Section 23 of the GST Act in view of clause (a) of Section 23 ibid according to which the person engage exclusively in the business of supplying of goods or services or both that are not liable to tax wholly or wholly exempt is not liable to be registered.
The appellant prayed to set aside the impugned advance ruling passed by the Authority for Advance Ruling.
PERSONAL HEARING:
7. The Appellant was granted personal hearing as required under law before this Appellate Authority on 30th May 2019. The Authorized representative of the Appellant S/Shri. N. Viswanathan , Advocate ; R. Ravikumar, Advocate and Shri. D.Rajesh- AAM of the Appellant appeared for hearing. They handed out a written submission. The learned representatives reiterated the written submissions submitted along with the Appeal Application filed by them and that filed at the time of personal hearing. They undertook to furnish written submissions on the Research 86 Development activities and on the Commercial/ Non-Commercial nature of training undertaken by them. In the written submission inter-alia, they stated as follows:
a. At the outset they pray that this Hon’ble Appellate Authority may be pleased to condone the delay of 13 days in filing the appeal in view of the true and factual reasons stated in the Petition seeking the Condonation of the said delay by following the judgment of the Hon’ble Supreme Court of India in the case of Esha Bhattacharjee Vs Managing Committee of Raghunathpur Nafar Academy and others [(2013) 12 SCC 649].
b. They are a society registered under the Society Registration Act, duly registered and recognized as a charitable institution with no profit no loss basis. The appellant is an institution funded by the Marine Products Export Development Authority [MPEDA for short] under the Ministry of Commerce arid is governed by an executive committee comprising of members from various ministries and Departments of both Central and State Governments including from MPEDA, MoC86I, ICAR, DBT, MoA and the various commissioners of fisheries of the AP, TN and Gujarat and the Directors of Fisheries of the state of Kerala, Tamil Nadu, Andaman Nicobar, UT of Puducherry, AP.
c. Under the Finance Act, 1994 a dispute was raised by the Guntur Central Excise Commissionerate that they were liable to pay the service tax on the receipt of consultancy from the overseas entities which ultimately was settled in their favour by the Commissioner of Service Tax (Appeals) Guntur holding that the activities of R&D, testing etc., fall under the agricultural extension service and that they being registered under Sec. 12AA of the IT Act are eligible to the exemption. However, their claim that they are a governmental authority under the Finance Act, was rejected which is now pending by way of appeal before the Hon’ble CESTAT, Hyderabad. Prior to the introduction of the GST they were not liable to pay the VAT on any of their activities under the relevant VAT Acts. They, being a non-commercial entity, the charges billed by them on the agriculturist or students or academic were very minimal which does not even meet the expenses incurred by them for delivering the goods or services
d. In the above Factual background, consequent to the introduction of new GST levy, they on being advised approached the Advance ruling authority mainly seeking to know whether they were required to register themselves with the authorities and if so what are the applicable rates for payment of the GST. The advance ruling authorities passed the impugned order dated 23.01.2019 merely by taking note of the activities of the appellant and the documents furnished by them without putting the legal issues before them passed the said order holding that for the following activities they are not eligible for the exemption and therefore liable to pay the appropriate CGST/SGST and accordingly have to register themselves with the authorities. Their main grievance is that the authorities below have not properly taken into consideration and extended them the benefit of the exemption under serial no. 1 and 54 of notification no. 12/2017 (rates) and also failed to see that they did not carry on any commercial activity besides placing wrong interpretation of the provisions of the Customs Tariff schedule in classifying the Artemia cysts under heading 0511 exposing clear bias towards revenue as detailed below
