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2023 (12) TMI 155 - HC - GSTExemption form GST - services rendered by the 2nd respondent in respect of wheat imported by the petitioner - Scope of Notification No.12 of 2017 Central Tax (Rate) dated 28.06.2017 in particular S.No.54(e) of the said notification - contract between the petitioner and the 2nd respondent for provision of the services - incidence of tax. HELD THAT:- The petitioner's entitlement to exemption must be determined by testing whether the services of loading, unloading, packing, storage or warehousing is rendered to agricultural produce or other than “agricultural produce” and not on the basis of the process the agricultural produce is meant to be subject to in the hands of the petitioner/ importer. In other words if on applying the definition of "agricultural produce" to the wheat that is imported and if it qualifies as an "agricultural produce", the mere fact that the buyer of “agricultural produce” intended to subject it to various other processes subsequently resulting in conversion of wheat into maida, atta and sooji would not take the services of loading, unloading, packing, storage and warehousing of the “agricultural produce” out of Serial No. 54(e) of the Exemption Notification. The reasoning in the impugned order of the 1st Respondent results in importing a condition as to the use to which the agricultural produce would be subject to in the hands of the service recipient. The above test is wholly alien to decide whether a commodity would fall within the definition of “agricultural produce” contained in the above Notification. The impugned Ruling thus suffers from the vice of arbitrariness inasmuch as it has taken into account aspects/ factors which are irrelevant. This Court also finds that the impugned order is flawed inasmuch as it results in adding conditions to exemption notification which is impermissible. Yet another reason the impugned order warrants interference is the fact that the expression "marketable" employed in the definition of "agricultural produce" has been misconceived. A reading of the above definition would show that it only indicates that the agricultural produce must be such that it is marketable i.e., capable of being marketed and it is not required of being actually marketed as such. The construction of the Notification in the impugned order of the 1st Respondent results in converting the expression "marketable" employed in the definition of “agricultural produce” into "marketed", which is impermissible - Applying the above reasoning to the term “marketable” used in the definition of “agricultural produce” it would be clear that it only means that the goods in question in the instant case wheat must be capable of being marketed in the primary market and it is not necessary to show that it is actually marketed. This Court is of the view that the impugned order holding that services of loading, unloading, packing etc., rendered in relation to the wheat imported is not entitled to exemption in terms of S.No.54(e) of Notification No.12 of 2017 on the premise that the imported wheat is not meant for primary market as such but it is intended to be converted into maida, atta, sooji etc., in the hands of the recipient i.e., the petitioner herein is unsustainable. The impugned order is set aside - Petition allowed.
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