In re Shiv Flour Mill (GST AAAR West Bengal)
Whether the supply of service provided by the applicant to Food & Supplies Department, Govt. of West Bengal by way of milling of food grains into flour for distribution of such flour under Public Distribution System is eligible for exemption under entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and what shall be rate of GST on such milling, if it does not fall under entry No. 3A?
The WBAAR, in its advance ruling dated 31.12.2021, has observed that the instant supply is a composite supply. The WBAAR has also observed that the instant composite supply undisputedly fulfils criteria (i) and (ii) in Para 7 above. Now, it has been observed that the value of goods in the instant composite supply is lesser than 25% of the total supply value. So the instant composite supply fulfils all the three criteria for qualifying for exemption under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (corresponding State Notification No. 1136 FT dated 28.06.2017) as listed in para 7 above.
In view of above discussion, we rule that in the instant case the supply of fortified wholemeal flour to the Food & Supplies Department, Government of West Bengal will fall under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (corresponding State Notification No. 1136 FT dated 28.06.2017) and exempt from taxation.
FULL TEXT OF THE ORDER OF AUTHORITY FOR APPELLATE ADVANCE RULING,WEST BENGAL
1. This Appeal has been filed by M/s Shiv Flour Mill (hereinafter referred to as “the Appellant”) on 31.05.2022 against Advance Ruling Order No. 16/WBAAR/2021-22 dated 31.12.2021, pronounced by the West Bengal Authority for Advance Ruling (hereinafter referred to as the „WBAAR’).
2. The appeal petition was admitted in the light of the order passed by the Apex Court dated 10.01.2022 in the matter of „Cognizance for extension of Limitation’ in the matter of Misc. app. No. 665 of 2021 & 21 of 2022 and Suo Motu Writ Petition (C ) no. 3 of 2020.
3. The Appellant holding GSTIN 19ACBFS2631N1ZU is a flour miller and stated to be engaged in the business of providing services of job work by crushing food grains supplied by the Food & Supplies Department, Government of West Bengal. The Food & Supplies Department supplies wheat to the appellant who crushes the grain to obtain the final product „atta’ (flour) which is fortified with micronutrients and then packed in labeled poly-packs as per specifications stipulated in the work order. The micronutrients and packing materials are supplied by the appellant. The packed fortified wheat flour is then supplied to the Food & Supplies Department to be sold / distributed subsequently under the Public Distribution Scheme (hereinafter referred to as PDS).
4. The appellant receives both cash and non-cash consideration for the job work done for the Food & Supplies Department. The wheat supplied to the appellant comes in gunny bags which are allowed to be retained by the appellant. Apart from the final product „atta’, two by-products namely Bran and Refractor are obtained on crushing of wheat and the said by-products are allowed to be retained by the appellant. By crushing of each 100 kg of wheat, the products obtained are 95 kg flour, 4 kg bran and 1 kg refractor. The non-cash considerations are thus gunny bags, bran and refractor which are later sold by the appellant.
5. The Appellant received cash consideration of Rs.136.48 for milling 100 kg wheat from Food & Supplies Department who also fixed notional consideration from sale of gunny bag @ 21.50 per bag, sale of bran @ 20/- per kg and refractor @ 1/- per kg. This is clear from Memo No. 2979(3)-FS/Sect./Food/4P-02/2016 dated 08.12.2020 issued by the Food & Supplies Department and also from the invoices raised by the miller on the Food & Supplies Department. Thus the consideration paid to flour millers for crushing100 kg wheat is as following:
