Circular No. 177/3/2014-ST., Dated: February 17, 2014 clarifies the doubts regarding the scope and applicability of  various exemptions available to various activities in relation to rice, under the negative list approach, as follows:
i) Transportation of Rice by a rail/ vessel or by goods transport agency: Transportation of food stuff by rail/ vessel or by  goods transport agency is exempt from levy of service tax. Food Stuff includes rice.
ii) Loading, unloading, packing, storage and warehousing of rice.
iii) Milling of paddy into rice: When paddy is milled into rice, on job work basis, service tax is exempt under Sr.no.30 (a) of notification 25/2012-ST dated 20th June, 2012, since such milling of paddy is an intermediate production process in relation to agriculture.

Circular No.177/03/2014 – ST, Dated :17th February, 2014

Subject: Rice– exemptions from service tax — regarding.

Doubts have been raised regarding the scope and applicability of various exemptions available to various activities in relation to rice, under the negative list approach. These doubts have been examined and clarifications are given below:

2. These doubts have arisen in the context of definition of ‘agricultural produce’ available in section 65B(5) of the Finance Act, 1994. The said definition covers ‘paddy’; but excludes ‘rice’. However, many benefits available to agricultural produce in the negative list [section 66D(d)] have been extended to rice, by way of appropriate entries in the exemption notification.

3. Transportation of rice:

3.1 by a rail or a vessel: Services by way of transportation of food stuff by rail or a vessel from one place in India to another is exempt from service tax vide  exemption notification 25/2012-ST dated 20th June, 2012 [entry sl.no.20(i)]; food stuff includes rice.

3.2 by a goods transport agency: Transportation of food stuff by a goods transport agency is exempt from levy of service tax [exemption notification 25/2012-ST dated 20th June, 2012 [entry sl.no.21(d)];  amending notification 3/2013-ST dated 1st March 2013]. Food stuff includes rice.

4. Loading, unloading, packing, storage and warehousing of rice:  Exemption has been inserted in the exemption notification 25/2012-ST dated 20th June, 2012 [entry sl.no.40];  amending notification 4/2014-ST dated 17th February 2014 may be referred.

5. Milling of paddy into rice: When paddy is milled into rice, on job work basis, service tax is exempt under sl.no.30 (a) of exemption notification 25/2012-ST dated 20th June, 2012, since such milling of paddy is an intermediate production process in relation to agriculture.

6. Reference may be made to JS, TRU in case of any further doubt. Trade Notice/ Public Notice may be issued. Hindi version to follow.

F. No.334/03/2014-TRU

[S.Jayaprahasam]
Technical Officer, TRU

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Category : Service Tax (3369)
Type : Circulars (7760) Notifications/Circulars (31851)
Tags : Budget (1956) service tax notifications (1086)

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