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TMI Blog2018 (11) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... Federation Limited, Raipur (C.G.) having GSTIN - 22AAAAC0934E1ZJ (here-in-after to be referred a MARKFED) on dated 16-11-2017 for execution of custom milling of paddy. i.e. Production of rice on job work. II. In the execution of job work of custom milling, applicant has to collect / procure paddy from Primary Co-operative Societies/paddy storage centers and thereafter transport it to the applicant's milling site for which MARKFED pays charges for transportation of paddy. III. After milling of Rice from the said procured paddy, applicant has to deliver rice @67% of total quantity of paddy, whereby the applicant retains other bye/waste products i.e. Rice Broken rice Bran Husk. IV. Thereafter, the applicant delivers such milled rice from their milling site to the various delivery centers of Nagrik Apurti Nigam/Food Corporation of India for which too MARKFED pays transportation charges. V. Besides, this in consideration of this custom milling job work of paddy, the applicant receives milling charges and incentive as decided by the State Government of Chhattisgarh. VI. In the aforesaid process initially gunny bags are provided by MARKFED to the applicant along with the paddy and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I. On the issue of service of transportation of paddy/rice the applicant submits that this activity of service is exempted under Sr.No. 21 and 18 of Notification no. 12/2017(State/Central). II. On the issue of service of custom milling of paddy the applicant states that the rate of tax on milling charges of paddy should be 5% (2.5% SGST +2.5% CGST) under Notification no. 31/2017-CT(R) Notification no. 11/2017-CT (Rate) dated 28-06-2017 Serial No. 26. III. The incentive as decided by the State Govt. of Chhattisgarh and given by the MARKFED should be considered as subsidy and not be included in taxable value under Section 2(31) of the CGST Act 2017 and should not be included in consideration of milling charges. IV. The Rate of tax on usage charges of Gunny Bags should be taxable at 5% GST as applicable on supply of gunny bags. 4. Personal Hearing:- In keeping with the established principles of natural justice, personal hearing in the matter was extended to the authorized representative of the applicant and accordingly, Mr. Sandeep Agrawal (Advocate) and Mr. Alok Agrawal (Advocate) appeared before us for hearing on 05.09.2018 and reiterated their contention. They also furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2017 are similar. Now we sequentially discuss the provisions that are applicable in the present case. 6.2 The applicant M/s. Taranjeet Singh Tuteja & Brothers has shown four different supplies as per the conditions of the contract with the MARKFED in which the amount is received for three service supplies and one goods' supply, the following being the three service supplies involved:- i. Milling of paddy - On the issue of service of custom milling of paddy the applicant states that the rate of tax on milling charges of paddy should be 5% (2.5% SGST +2.5% CGST) under Notification no. 31/2017-CT(R) Notification no. 11/2017-CT (Rate) dated 28-06-2017 Serial No. 26. ii. Transportation of paddy and rice - the applicant submits that this activity of service is exempted under Sr.No. 21 and 18 of Notification no. 12/2017(State/Central). As per the notifications issued under the provisions of State GST Act, the above mentioned both the supplies are acceptable as individual supplies. III. Incentive for custom milling of paddy - The applicant has requested to consider the incentive amount as exempted, citing it as subsidy. Whereas, the applicant themselves has depicted this amount as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment Notification No. 31/2017, issued Notification No. F-10-82/2017/CT/V(146), dated 13-10-2017 the amount received from transportation of rice/paddy would be exempt supply, provided only if any registered person is involved in the business of transportation work, In this case the applicant has entered into a contract with MARKFED mainly for custom milling. The custom milling job involves the transportation of paddy from various paddy collection centers of MARKFED to the rice mill station of the applicant and transportation of rice from rice mill to Civil Supplies Corporation Units in the same contract. The amount received from the compensation of packing material gunny bags during transportation and the job work of custom milling are also the inseparable part of the job of milling work. In this way all the supplies are interrelated and can in no way be vivisected in the said contract, the primary and principal work being custom milling of paddy. (b) For such supplies CG GST Act specifically provides as under :- Section-2(30):- "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsportation works would be given full and unconditional exemption under corresponding Notification. On account of conditional exemption, the supplies involved in the instant case in hand would be exigible to tax. Thus in view of above, the part-exemption as sought by the applicant for the service supply of transportation of paddy and rice is not eligible to them, the same being under a false premise. The said supply involved here cannot be separated from the tax computation of composite supply. Thus as per the provision of composite supply under section 8(a) of Chhattisgarh GST Act 2017, we come to the considered conclusion that the custom milling of paddy being the principal supply (predominant supply) involved in the case in hand, the same would attract GST (2.5% CGST and 2.5% SGST). In view of the deliberations and discussions as above, we pass the following order:- ORDER (Under section 98 of the Chhattisgarh Goods and Services Tax Act, 2017) No.STC/AAR/05/2018 Raipur Dated 10/10/2018 The ruling so sought by the Applicant is accordingly answered as under:- As per Agreement No: AC112017410015 Dated 16.11.2017 with Chhattisgarh State Marketing Co-Operative Federation ..... 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