Home Case Index All Cases GST GST + AAR GST - 2021 (1) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 698 - AAR - GSTClassification of supply of services - services provided by the applicant are in relation to agricultural operations directly in connection with raising of agricultural produce - Drilling of Borewells for supply of water for agricultural operations like cultivation including seeding, planting and ploughing - Letting out of compressors for pumping of water from the borewells to the agricultural fields - whether the said services are covered by the entry SI.No54 of Notification 12/2017 CT(Rate) dated 28.06.2017? HELD THAT:- The applicant carries on borewell drilling. From the documents furnished, it is seen that they raise invoice as ‘Exempted sales’ when the drilling is made for ‘Agriculture’ and in such cases, the invoice is raised classifying the services under SAC 9986 and no tax is charged. When the drilling is undertaken for Industries (other than agriculture), the invoice is raised as ‘Tax Invoice’, classifying the service under SAC 995434 and appropriate tax (CGST 8s SGST) is collected. The issue raised before us pertains to the ‘drilling and hire service for agriculture’, which the applicant classifies under SAC 9986 as ‘Support services for agriculture’. The contention of the applicant is that the borewells drilled provides the required quantity of water for cultivation of agricultural crops and the entry Sl.No.54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 covers agricultural operations directly related to raising of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; the borewells drilled provides the required quantity of water for cultivation of agricultural crops.; the supply of compressors which becomes a part of the motor that pumps water is inseparable from the activity of cultivation and therefore is a ‘Support service for agriculture’. ‘Provision of agricultural machinery with crew and operators’ and ‘operation of irrigation systems for agricultural purposes’ are listed as ‘Support services to crop production’. In the case at hand the applicant does not undertake the ‘operation of irrigation system for agricultural purposes’ and also ‘compressors’ are not agricultural machinery. They undertake the activity of drilling of borewells in the agricultural land and let out compressors. The said activity is not classifiable under SAC 9986 - In the case at hand, the applicant undertakes only drilling of bore wells in the agricultural land and are letting out compressors. The applicant are classifying the same under SAC 995434, when the said activity is undertaken in places other than agricultural land and under SAC 995434 when the drilling is done in other than agricultural land. Water-well drilling services are specifically covered under 995434 and the said category includes all Water-well drilling services without any exceptions. Therefore, it is evident that the drilling of borewell without exceptions (even in the agricultural land) is a construction service involving drilling water well and not a support service for agriculture. As the activity do not merit classification under SAC 9986, the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. Compressor is not an agricultural machinery and is a General-Purpose Machinery. Also, only provision of agricultural machinery with crew and operators are stated as ‘Support service for agriculture’. Therefore, letting out of the Compressor is also not a ‘Support service for agriculture’ classifiable under SAC 9986 and the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.
|