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2019 (6) TMI 620 - AAAR - GSTClassification of services - services provided in packing of tea bags - rate of GST - composite services or not - challenge to AAR decision - HELD THAT:- The activity of M/s. Vedica Exports Tea Pvt Ltd that is stuffing tea in pouches and supplying the said tea bags cannot be said to be an act of manufacturing as it has not changed the nature and character of tea. Manufacturing involves change or changes brought about by application of processes whereby the emerging product is a new and distinct commodity and commercially it can no longer be regarded as the original one, The activity of Respondent of filling tea into tea bags does not change the basic nature of tea but only makes it classifiable under a different heading on the basis of its packaging and not on account of the nature of tea packed therein. Actually. in tea bags blended tea leaves are put into special porous pouches and then stitched so that for making tea the bags need to be dipped in hot only. Tea bags offer a quick and user friendly way of making the beverage. First member opinion - Packing of tea bags in cartons is an ancillary service to the main service of making tea bags. Tea and tea bags are distinct and separate commercial products. Manufacturing of tea leaves and manufacturing of tea bags are completely separate processes. Processes like plucking, withering, wilting, disruption, oxidation, fixation, kill-green, rolling, shaping, drying, aging, curing or tea sorting are processes associated with manufacturing of tea and not tea bags. Tea bags have distinct character and use and rightly classified under Tariff item 0902 40 40. In view of above discussion it is held that the service offered by the Respondent to M/s. Hindusthan Unilever Ltd. is classifiable under Sl. No. 26 (i) (f) of the Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended vide Notification No. 31/2017-CT (Rate) dated 13.10.2017. and taxable @5% Second member opinion - Para 3 of Schedule II (Section 7) of CGST Act, 2017 sated that “Any treatment or process which is applied to another person's goods is a supply of services” and SAC sub-heading No. 9985 41 clearly includes that packaging of goods (in this case tea, a food product filled in pouches) for others and should be treated as Packaging Service classifiable under SAC 998541 taxable under Sl. No. 23 (iii) of Notification No. 11/2017 - CT (Rate) as amended. Thus the service offered by the Respondent to M/s. Hindusthan Unilever Ltd. is classifiable under SAC 9985 41 and taxable @ 18% under Sl. No. 23(iii) of the Notification No. 11/2017-CT(Rate) dated 28.06.2017. as amended. As the members of the West Bengal Appellate Authority for Advance ruling differ on the classification of the service supplied by the Respondent to M/s. Hindusthan Unilever Ltd.. it is deemed that no Advance Ruling can be issued in respect of the questions under Appeal as per provisions of section 101 sub-section (3) of the GST Act. Thus The Advance Ruling No. 36/WBAAR/2018-19 dated 28.01.2019 = 2019 (1) TMI 1489 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL is deemed to be not in operation.
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