Nutan Warehousing Company Pvt. Ltd. Vs Commissioner (Bombay High Court)
Bombay High Court held that benefit of exemption under notification no. 12/2017- Central Tax (Rate) dated 28.06.2017 available to loading, unloading, packing, storage or warehousing of “agricultural produce” namely “tea”.
Facts- This petition under Article 226 of the Constitution of India challenges an order dated 10 December 2018 passed by the ‘Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax’ constituted u/s. 99 of the Maharashtra Goods and Services Act,2017, whereby the petitioners appeal filed u/s. 100 of the Central Goods and Services Tax Act,2017 and the Maharashtra Goods and Services Tax Act, on the issue whether the petitioner would be entitled to an exemption under Notification No. 12 of 2017 dated 28 June, 2017, so as to be exempted from payment of service tax under Sr.No.54(e) of the said notification pertaining to loading, unloading, packing, storage or warehousing of “agricultural produce” namely “tea” has been rejected.
Conclusion- It cannot be said that “tea leaves” produced from the tea gardens being primary agricultural produce, would not cease to be agricultural produce once they got processed. It is observed that after plucked tea leaves are processed by roasting them and then by subjecting them to further process of blending and ultimately packing them in suitable packets, they still remained all the same agricultural produce, so manufactured out of the basic agricultural raw material ‘tea leaves’.
Held that the essential characteristic of the tea being an ‘agricultural produce’ would not stand extinguished by mere processing and packing in whatever form.
It is settled principle of law that a writ of certiorari can be issued only when there is a failure of justice and that it cannot be issued merely because it may be legally permissible to do so. There must be an error apparent on the face of the record as the High Court acts merely in a supervisory capacity. An error apparent on the face of the record means an error which strikes one on mere looking and does not mean long drawn out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule, made returnable forthwith. Respondents waive service. By consent of parties, heard finally.
2. This petition under Article 226 of the Constitution of India challenges an order dated 10 December 2018 passed by the ‘Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax’ constituted under Section 99 of the Maharashtra Goods and Services Act,2017, whereby the petitioners appeal filed under Section 100 of the Central Goods and Services Tax Act,2017 and the Maharashtra Goods and Services Tax Act (for short ‘CGST Act’ and ‘MGST Act’ respectively), on the issue whether the petitioner would be entitled to an exemption under Notification No. 12 of 2017 dated 28 June, 2017, so as to be exempted from payment of service tax under Sr.No.54(e) of the said notification pertaining to loading, unloading, packing, storage or warehousing of “agricultural produce” namely “tea” has been rejected.
3. The petitioner’s case as set out in the petition is as follows:
The petitioner is a company incorporated under the Companies Act, 1956. The petitioner was inter alia formed to carry out the business of warehousing, cold storage and refrigeration in all its branches, activities and spheres. It provides godown and warehousing facilities to the distributors of agriculture and allied products. The petitioner also has licence for carrying on business of warehousing under the Bombay Warehouses Act, 1959. The petitioner has constructed warehouses at various places, one of the warehouse constructed by the petitioner is at Fursungi, Pune, in respect of which application for advance ruling in question came to be made by the petitioner. It has obtained a registration under the CGST and MGST Act.
4. The petitioner had let out its warehouse to M/s. Unilever India Exports Ltd. (for short ‘Unilever’) on payment of compensation as per the provisions of the Bombay Warehouses Act, 1959.
5. The petitioner has contended that Unilever procured in bulk ‘tea’ of various qualities either from public tea auctions or directly from manufacturers of tea in 50 kg bags and stored them in the petitioner’s warehouse. It is contended that such procured tea leaves normally underwent standard processes prior to its procurement. The processes as described by the petitioner, are as under:-
“Tea leaves are plucked from the tea plants and the green leaves, plucked from the plants are not fit for the human consumption, it cannot be sold in the open market for human consumption. The raw tea leaves are withered by exposure in the shadow of the sun or by heating in trays until pliable. Thereafter the leaves are rolled by hand or machine in order to break the leaf cells and liberate the juices and enzymes. Finally, the leaves are completely dried either by further exposure to the sun, over fires, or in a current of hot air and then the tea leaves are fermented in baskets, glasses and in clothes. Thereafter the leaves were subjected to grading with sieves of various sizes. The said leaves are finally roasted with charcoal for obtaining suitable flavour and colour. Thereafter the said tea is packed in the bulk packs.
The processing of the tea makes it marketable by minimal process and they are made fit for human consumption. All the above processes are necessary for the purpose of saving the tea leaves from perishing. In case the above process is not carried out immediately, the entire tea leaves would be perished. The process, as indicated above, at no point of time, crossed that limit and robbed the tea leaves of their character of being and continuing as such substantially.”
The process undertaken on green leaves consists of only above processes and not beyond them.”
6. The procurement of such tea is stated to be undertaken during the As per the orders as may be received, Unilever would undertake blending and packing of the tea, at the petitioner’s warehouse. After the tea is packed, it is exported to overseas countries. The petitioner being of the strong view that the tea, procured in bulk, either from public tea auctions or directly from manufacturers of tea, was an agricultural produce as defined in clause 2(d) of the Notification No.12/2017- Central Tax (Rate) dated 28 June 2017 (for short ‘the 2017 Notification’), for the reason, that the tea was not losing its essential characteristics.
7. The petitioner in its application made to the Authority for Advance Ruling (for short “AAR”), claimed that the storage and warehousing of tea was exempted vide Serial No. 54(e) of Notification No.12/2017- Central Tax (Rate). The said entry is required to be noted which reads thus:-
