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2022 (1) TMI 303 - AAR - GSTEligibility of exemption under GST - composite supply - service by way of milling of food grains into flour to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System - exemption under entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - rate of GST on such milling, if it does not fall under entry No. 3A - HELD THAT:- The applicant, according to the agreement as produced, has been selected for empanelment for crushing of wheat into wholemeal atta and fortify it by premixing of micro-nutrients containing Iron, Folic acid and Vitamin to a specific percentage. The agreement further requires the applicant to pack the crushed stock of wholemeal atta after fortification into properly levelled poly-packs having thickness of 40 microns or above. It, therefore, appears that the activities undertaken by the applicant for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of ‘composite supply’ under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. Whether this composite supply is made in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - HELD THAT:- The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance & Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance & Control) Order, 2013 - the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- In the instant case, the supply undisputedly fulfils the criteria as referred to in (i) and (ii) above. The applicant receives ₹ 10/- and ₹ 50/- i.e., ₹ 60/- in total against fortification cost and packing charges for crushing of 100 kgs of wheat which involves supply of goods. However, the applicant has not furnished before us any document in support of receipts towards non-cash consideration upon sale of bran, refractory and gunny bags which are claimed to have been sold in the open market by the applicant. In absence of such document, we are unable to ascertain whether the value of supply of goods in the composite supply exceeds 25% of the value of supply or not. Where the non-cash consideration involved in the instant supply is found to the extent of such an amount that the value of supply of goods does not exceed 25% of the total value of supply, the supply shall qualify for exemption vide entry serial 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 [corresponding State Tax Notification No. 1136-FT dated 28.06.2017]. Otherwise, the supply shall attract tax @ 5% vide entry serial No. 26 of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017.
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