TMI Blog2021 (1) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... illing 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinafter referred as Applicant ) is registered under the GST vide GSTIN No. 33AAIPJ6250H1ZV. They have sought Advance Ruling on the following questions: 1. Whether the following supply of services provided by the applicant are in relation to agricultural operations directly in connection with raising of agricultural produce: i. Drilling of Borewells for supply of water for agricultural operations like cultivation including seeding, planting and ploughing. ii. Letting out of compressors for pumping of water from the borewells to the agricultural fields. 2. If the answer to the above question is in the affirmative, whether the said services are covered by the entry SI.No54 of Notification 12/2017 CT(Rate) dated 28.06.2017 The applicant has submitted the copy of the application in Form GST ARA-01 and also submitted a copy of challan evidencing payment of application fees of ₹ 5000/- each under sub-rule(1) of Rule 104 of CGST Rule 2017 and SGST Rules 2017. 2.1 The applicant has stated that they provide drilling of borewell services mainly to agriculturists engaged in raising of agricultural crops. Water is a part and parcel of essential requirements i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment Year 2019-20 iii. Profit Loss Account for the year ended 31.03.2019; iv. Balance Sheet as on 31.03.2019; v. Invoice No. AD 19-20/10/024 dated 11.10.2019 raised on Aalif Farm, Pudukottai for Drilling Hire Charges with CGST SGST under the description HSN 995434; vi. Invoice No. AD 19-20/08/020 dated 09.08.2019 raised on High Energy Batteries Ltd., Mathur for Drilling Hire Charges with Output CGST SGST under the description HSN 995434; 5. The applicant is under the administrative jurisdiction of State authorities. The State Jurisdictional authority vide their letter Rc.No. 520/2020/A4 dated 28.07.2020 has stated that Drilling of bore- well for supply of water for agricultural operations like cultivation including seeding, planting and ploughing are not covered by Notification 12/2017 CT(Rate) Drillers and Compressors are taxable under GST. The petitioner has invested to purchase the drillers and compressors from registered dealers and paid SGST and CGST. Hence they have received payments from customers for utilizing the drillers and compressors. Further, the Agricultural operations like cultivation including seeding, planting and ploug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal of seed moisture to a safe level for seed storage; drying, cleaning, grading and treating of seeds to be marketed; ii. post-harvest crop services such as preparation of crops for primary markets, cotton ginning services; iii. Other support services to crop production like tilling of fields preparatory to planting; planting, cultivation and fertilization of crops; spraying, including from the air; iv. pest control for agriculture; trimming of fruit trees and vines; transplanting and thinning of crops; harvesting; v. provision of agricultural machinery with crew and operators; operation of irrigation systems for agricultural purposes; vi. other services necessary for agricultural production; Crop production services on inputs owned by others like operation of a crop production unit on of e or contract basis This service code does not include: - formation and clearance of agricultural land, cf. 995432 - services provided by agronomists and agricultural economists, cf. 998311 - other pest control services, cf. 998531 - water distribution services through mains (on a fee or contract basis), cf. 998633 From the above, it is ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the bore-wells drilled by them in the agricultural land, on drilling of the said wells and therefore is a Support service for agriculture . Their contention is that water is essential for cultivation and the compressor are let out to pump water. 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. 9. In view of the above findings, we rule as under Ruling 1. Drilling of Borewells for supply of water in agricultural land is not Support Service for agriculture classifiable under SAC 9986 for the reasons stated in para 8.3 above 2. Letting out of compressors for pumping of water from the borewells to the agricultural field is not Support Service for agriculture classifiable under SAC 9986 for the reasons stated in para 8.4 above 3. The above two activities of the applicant are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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