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2020 (7) TMI 376 - AAR - GSTRate of GST - tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves - purchase of tobacco leaves form other dealers who have purchased them from farmers, for the purpose of trading - seggregation of tobacco into grades depending upon their size (width), colour /shade, length, texture of the leaf etc., and sells such graded tobacco leaf - tobacco leaves are butted and sold to other dealers - tobacco leaves re-dried without getting them threshed and sold - tobacco leaves threshed and re-dried - tobacco threshed and re-dried on job work basis at others' premises and then sells such threshed and re-dried tobacco leaves to others. HELD THAT:- The transactions of tobacco from auction platform to the supply made to the exporter are to be interpreted in the light of the relevant notifications and to decide the rate of tax accordingly. As seen from the different stages of commodity i.e., from the leaves stage to the final product (manufactured tobacco), the green leaf plucked from the plant undergoes different types of curing to reduce the level of moisture to the maximum extent for sustainability and to continue as leaf for further process. The tobacco leaf will be entitled as a commercial commodity only drying (Curing) and normally put to trade in form of bundles. The same will be traded between the farmer and the trader and trader to trader/manufacturer and so on. As envisaged from the entries under GST, there are four different entries for tobacco, one under Schedule-I. Liable @5% (CGST 2.5% and SGST 2.5%) and the remaining heads are in Schedule- IV liable 28% - And there is an entry of tobacco leaves under Reverse charge mechanism also. The commodity “tobacco leaves” shall be interpreted in the light of the entry 109, Schedule- I of Notification No.1/2017-Central Tax (Rate) and the entry no 3 inserted under the notification 4/2017-CGST (Rate) issued for liability under reverse charge mechanism and the relevant HSN code mentioned against the description of the commodity i.e., 2401. As observed from the facts, i.e process of tobacco, from the field to final product, the green leaves undergo curing process, and become eligible commercial commodity, for which the transaction takes place in between the farmer and the trader on the auction platform. Further, as per the clarification issued by The Department TRU(Tax Research Unit)vide circular F.No.322/2/2017/Dec.2017, “Tobacco Leaves” means, leaves of tobacco as such or “broken leaves” or “Tobacco Leaves stems”. It clearly expresses that the leaves as long as they do not loose their basic character as 'leaves', shall be considered as tobacco leaves only - In the present case the applicant purchases the dried leaves on auction platform and trades the same to other dealers or exporters and further engaged in threshing and re-drying of tobacco leaves on job work basis for other traders or manufacturers. Rate of GST on tobacco leaves (butted or re-dried) is 5% - Rate of GST will be 28% if the applicant gets the tobacco leaves threshed and re-dried.
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