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2022 (11) TMI 82 - APPELLATE AUTHORITY FOR ADVANCE RULING, TELANGANATaxability - agricultural produce or not - seeds produced/ procured and processed, packed and sold by the Applicant as seeds for sowing - storage of the seeds in the leased storage facility/godowns, loading, unloading and packing of the seeds (heading No.9986) by the job worker on job work basis - processes, namely, cleaning, drying, grading and treatment with chemicals (heading No.9986) carried out by the job worker on job work basis - transport of seeds from the farm lands to storage facility/godown of the applicant - transport of seeds from one storage facility/godown of the applicant to the other storage facility/godown of the applicant - transport of packed seeds from storage facility/godown of the applicant to the distributor and transport of sales-returns - processes undertaken by the applicant, namely, cleaning, drying, grading, treatment with chemicals and packing (heading No.9986), for himself - supply or not - applicability of exemption under N/N. 12/2017- Central Tax (Rate) dated 28-06-2017 and 11/2017- Central Tax (Rate) dated 28-06-2017. HELD THAT:- The appellants are in the business of production and sale of agricultural seeds. In the process of production, the applicant outsources certain services such as cleaning, drying, grading and packing to the job workers and stores the seeds in various facilities after processing them. In the process they also transport the seeds by engaging a GTA. The applicant filed an application before the lower authority for a ruling on their activities with reference to exemption / taxability under Goods and Services Tax Act. Since, the ruling of the lower authority was pronounced against the interests of the applicant, they filed the present appeal before this authority. It becomes imperative to analyse the definition of 'agriculture produce'. The primary factory which needs to be understood is that to get into the bracket of agriculture produce for claiming exemption, the main condition is that either no processing is done on the produce or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. In the present case, as per the written submissions, the applicant takes land on lease and produces agriculture seeds, food grains / vegetables / green vegetables and fruits out of cultivation and out of the produce through harvesting, it segregates part of the agriculture produce based on its quality and germination strength and undertakes preservation process such as clearing, drying, grading and chemical processing to make the seed fit for sowing purpose and to have better shelf life - If the activities of the applicant are only cleaning, drying, grading without involving any chemical processing on the subject produce, then the services would be on agriculture produce and exemption would be available. However, since in this case it is not proved beyond doubt by the applicant that their activities get exempted under the said two notifications, we are not inclined to accept the plea of the applicant. The order passed by the lower authority is upheld - Appeal disposed off.
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