TMI Blog2018 (10) TMI 1712X X X X Extracts X X X X X X X X Extracts X X X X ..... ere in the tariff and therefore it should be classified under the residuary entry Serial Number 453 of the Notification No. 1/2017-C.T. (R), dated 28-6-2017 [ Any Chapter-Goods which are not specified in Schedule I, II, IV, V or VI ] having a GST rate of 18% - the appellant is required to pay GST @ 18% on the supply of de-oiled mahua cake and is therefore entitled to avail input tax credit. - Order No. 03/AAAR/12/10/2018 - - - Dated:- 12-10-2018 - Shri S.H. Hasan, Member (CGST) and Smt. Kamini Chauhan Ratan, Member (SGST) ORDER The present appeal has been filed under Section 100 of the Central Goods and Service Tax Act and Uttar Pradesh Goods and Service Tax Act, 2017 (hereinafter referred to as the CGST Act and UPGST Act ) by M/s. Indo Prosoya Foods (P) Ltd., 54/10, Naya Ganj, Kanpur, Uttar Pradesh-208001 (hereinafter referred to as the Applicant ) against the Advance Ruling Order No. 6, dated 25-5-2018 by the Authority for Advance Ruling, Uttar Pradesh [2018 (17) G.S.T.L. 35 (A.A.R. - CST)]. 2. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h farming and other aquatic uses, which is wholly used for the above purpose. De-oiled Rice Bran is used for cattle-Feed, Poultry Feed and other animal Feeds, which are wholly used for the above purpose. (f) During the process of the oil extraction, a huge quantity of de-oiled cake is also produced (almost to the 65%-70% of the raw material). (g) This de-oiled cake is actually a waste for the applicant since they are only registered under the law for production of edible oil. 5. Application of the party was forwarded to the jurisdictional officer, CGST and CX, Lucknow and they submitted their views as under :- Mahua de-oiled cake has been described rich in sugars, nitrogen proteins but also there is presence of some toxic saponins which limits its usages as fish or cattle feed. However, on mixing further with some other vegetable and cereal waste its usage in cattle feeding and fish feeding are usual in practice. De-oiled rice bran has been seen in its usage in largely cattle feed, poultry fish feed are usual in practice. So far that purpose it can be classifiable in 2309 and De-oiled rice bran has been seen in its usage in largely cattle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact if the emergence of 'waste' is to be treated as supply at all. (iv) De-oil Cake is generated as waste and cannot be treated as a 'supply by way of manufacture'. (v) Application of Section 17(2) CGST Act, 2017 does not extend to involuntary generation of 'Waste'. (vi) Marketability is not a criterion to classify an item as 'waste'. 5. The personal hearing in the matter was fixed on 26-9-2018 vide letter C. No. V(30) CCO/LKO/Tech/20/Appeal /Advance Ruling/IPSL/2018/2124 dated 20-9-2018. Personal Hearing 6. None appeared for personal hearing. Appellant vide their e-mail letter dated 24/25-9-2018 requested for postponement of the date of personal hearing to some other date in month of October due to non-availability of their Counsel. 7. As the Appellate Authority of Advance Ruling Uttar Pradesh consist of a member of the Central GST and a member of State GST and the appeal is to be decided in a time bound manner, it not possible to extend the date of personal hearing to another date. So the appeal is being taken up for consideration based on the facts and documents av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a waste and a mere technological necessity. For the reasons as are being discussed herein below, we are of the view that the de-oiled cake is neither a waste nor a by product of mere technological necessity and hence all the cited case laws become irrelevant -to the present case. In fact two equally and completely commercially viable products emerge during the manufacturing process of solvent extraction viz. the oil and the de-oiled cake. Both these products are sold by a company with equal emphasis and both are commercially lucrative to the solvent extractor. The Ld. Counsel has tried to support his claim of de-oiled cake being waste by insisting that its production is 'unintended' and that it is 'technological necessity'. We find these terms inapplicable since after the oil is extracted from the pellets, the manufacturing process does not end at that point. In fact, the pellets from which oil has been extracted, further undergo Desolventising process i.e. separation of normal-Hexane from the De-oiled bran subsequent to which the de-oiled bran is chemically tested for their oil and silica content to meet clients' specifications and finally it is sent to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where the respondent assessee has paid input tax while purchasing the raw material, namely, sunflower oil cake. This has been used for extraction of sunflower oil. Even after extracting the sunflower oil what remains is de-oiled cake which, no doubt, is a by-product. However, it is not to be discarded as waste. Rather, it is not only marketable as goods but fetches significant sale price. The ratio of sale of sunflower oil and de-oiled cake is 55:45. The respondent-assessee is, thus, able to generate 45% revenue from the sale of de-oiled cake. However, no output tax is paid on the sale of this item since this item is exempted from payment of VAT under Section 5 of the KVAT Act. Section 17 is meant to take care of these situations, which is the purpose behind that provision. Approach of the High Court, in fact, defeats the said purpose. Therefore, there was no reason for departing from the principle of literal construction in a taxing statute. It is settled proposition of law that taxing statutes are to be interpreted literally [See Commissioner of Income Tax-III v. Calcutta Knitwears, Ludhiana (2014) 6 SCC 444, State of Madhya Pradesh v. Rakesh Kohli Anr. - (2012) 6 SCC 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council. 17. Thus in light of the above decisions the contention of the appellant that de-oiled cake is waste, hence they cannot be treated as 'supply' fails and following the judicial principles, the above referred decisions are very much applicable to the present case and therefore the sale of de-oiled cake is undoubtedly 'supply'. Activities which are not supply are categorically outlined in the GST Act itself. Anything not covered by the exclusion will fall under the ambit of supply. Therefore, it is hard to comprehend the rationale of the appellant in not considering de-oiled cake as supply, since the definition (as quoted above) leaves no ambiguity that anything that is sold with or without consideration, is supply. Having settled the issue of sale of de-oiled cake being supply, it can be concluded that Section 17(2) of the GST Act, 2017 is very much applicable. But first it has to be decided as to whether the specific items are exempted. 18. After going through the tariff we find that De-oi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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