In re Narayan Trading Corporation (GST AAR Telangana)
The case of “In re Narayan Trading Corporation (GST AAR Telangana)” involves an application for an Advance Ruling submitted by Narayan Trading Corporation to the Authority for Advance Ruling (AAR), Telangana. The application seeks clarity on the applicability of the Goods and Services Tax (GST) on certain supplies made by the applicant. Here’s a detailed exploration of the case:
Background: Narayan Trading Corporation, a registered taxpayer under the Central Goods and Services Tax (CGST) and the Telangana Goods and Services Tax (TGST) Act, 2017, is engaged in trading food grains, sugars, edible oils, etc. They have been a government contractor for over 30 years, supplying these items through various nodal agencies appointed by the Ministry.
Notification and Clarifications Sought: The application was triggered by the introduction of Notification No. 6/2022 – Central Tax (Rate) dated 13th July 2022, which amended the GST taxability criteria for unbranded food grains, pulses, flours, etc., specifying that such goods would be taxable if they are “pre-packaged and labeled”. Narayan Trading Corporation sought clarification on whether their supplies through the Hyderabad Agricultural Co-operative Association Limited (HACA) would attract GST, particularly in light of this notification and subsequent FAQs published by the Ministry of Finance.
Questions Raised: The applicant raised two main questions for Advance Ruling:
1. Whether the Department for Women, Children, Disabled & Senior Citizens is covered under the definition of “industrial consumer or institutional consumer”.
2. Whether the goods supplied by the applicant through HACA attract GST.
Personal Hearing and Arguments: During a personal hearing, the representatives of Narayan Trading Corporation reiterated their submission, emphasizing that their case was neither pending nor decided in any proceedings under the provisions of the CGST/TGST Act.
Discussion and Ruling: The Authority for Advance Ruling (AAR) Telangana examined the classification of the commodities in question, the relevant GST notifications, and the definitions provided under the Legal Metrology Act, 2009, and its rules. The ruling was based on the interpretation of “pre-packaged and labeled” goods and the specific exclusions provided for institutional and industrial consumers under the Legal Metrology (Packaged Commodities) Rules, 2011.
1. Ruling on the First Question: The Department for Women, Children, Disabled & Senior Citizens qualifies as an “institutional consumer” under the GST regime, provided certain conditions are met, including the requirement that packaged commodities bear a declaration ‘not for retail sale’, and the purchases are made directly from the manufacturer or wholesale dealer for non-commercial, institutional use.
2. Ruling on the Second Question: The goods supplied by the applicant through HACA do not attract GST, provided they meet the same conditions applied for institutional consumers, essentially mirroring the criteria established for the first question.
Conclusion: The AAR ruled favorably for Narayan Trading Corporation, clarifying that supplies made to the Department for Women, Children, Disabled & Senior Citizens through HACA would not attract GST, provided specific conditions related to packaging, sale declarations, and the nature of the consumer are met. This ruling provides valuable guidance on the interpretation and application of GST laws, particularly in relation to the supply of food grains and other essentials, and underscores the importance of regulatory definitions in determining tax liabilities.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TELANGANA
[ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER SECTION 98(4) OF THE TEALANGANA GOODS AND SERVICES TAX ACT, 2017.]
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1. M/s. Narayan Trading Corporation, Shop No 136, Sri Krupa Market, Malakpet, Hyderabad, Telangana- 500 036 (36AABFN4585E1Z9) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules.
2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.
3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- under SGST and Rs. 5,000/- under CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided nor are pending before any authority under any provisions of the CGST/TGST Act’2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98(2) of TGST Act’2017
4. BRIEF FACTS OF THE CASE:
The applicant M/s. Narayan Trading Corporation “GSTIN:36AABFN4585E1Z9” is a registered taxpayer under the CGST & SGST Act, 2017 and is actively engaged in the trading of Food grains, Sugars, Edible Oils etc., for the past 30 Years and is a government contractor for supply of above said items directly and through nodal agencies as appointed by the Ministry from time to time.
It is submitted by the applicant that they are making supplies to M/s. Hyderabad Agricultural Cooperative Association Limited (HACA) Hyderabad, which has come into being in the year 1949, to serve the farming community of the erstwhile State of Hyderabad. That HACA commenced functioning from 01.07.1949. Originally, the area of operation of the society covering (16) districts of the then Hyderabad State. The Society thus comes under the Multi State Cooperative Societies Act 1984. HACA is an Apex Co-operative Marketing Society of the erstwhile state of Hyderabad.
They submitted that the levy of GST on unbranded food grains, pulses, flours etc., has come to forefront only after the introduction of Notification No. 6/2022 – Central Tax (Rate) dated 13th July 2022. A copy of the notification is enclosed herewith. The relevant extracts of the notification are as follows:
S. No. B(xvi) “for the portion beginning with the words “and put up in unit container and bearing a brand name”, the words “pre-packaged and labeled” shall be substituted;”
That the press release dated 18th July 2022, titled FAQS on GST has clarified applicability on ‘pre- packaged and labeled’ goods. They require a clarification in this regard. Hence this application.
4.2 Company Background:
M/s. Narayan Trading Corporation is a registered taxpayer under the CGST & SGST Act, 2017 and is actively engaged in the trading of Food grains, Sugars, Edible Oils etc., for the past 30 Years and is a government contractor for supply of above said items directly and through nodal agencies as appointed by the Ministry from time to time. M/s. Hyderabad Agricultural Co-operative Association Limited (HACA) Hyderabad has come into being in the year 1949, to serve the farmers community of the erstwhile State of Hyderabad and commenced functioning from 01.07.1949. Originally, the area of operation of the society covering 16 districts of the then Hyderabad State. The Society thus comes under the Multi State Co-operative Societies Act 1984.
5. QUESTIONS RAISED:
Q.1 Whether Department for Women, Children, Disabled & Senior Citizens is covered under the definition of “industrial consumer or institutional consumer”?
Q.2 Whether the goods supplied by the applicant through the Nodal Agency – Hyderabad Agricultural Co-operative Association Limited (HACA) attracts GST?
6. PERSONAL HEARING:
The Authorized representatives Sri M. Ravi Teja Reddy, CA & AR attended the personal hearing held on 20.03.2023. The authorized representatives reiterated their averments in the application submitted and contended as follows:
Further, the Authorized Representative/Applicant M/s. Narayan Trading Corporation, Hyderabad, reiterated that their case /Similar Case is not pending in any proceedings in the applicant’s case under any of the provision of the Act and have not already decided in any proceedings in the applicant’s case under any of the provisions of the Act.
7. DISCUSSION & FINDINGS:
The commodity under question i.e., redgram or pigeon pea is classified as HSN 0713 60 00. As on 13-07-2022, S.No.215 of Schedule-I of Notification No.1 of 2017 as amended vide Notification No.18 of 2018 dt: 26-07-2018 stood as follows with respect to this commodity:
