9911796707
TMI Blog2022 (9) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be engaged in the business of cultivation, planting and nurturing of fruit trees like citrus lemon, pomegranate etc in marginalised areas and mangrove seeds and seedlings in coastal areas across different states of the country with the sole aim of environmental protection against climate change. The applicant carries out these activities pursuant to the contracts awarded by internationally acclaimed environmental organizations. 1.3 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land identification is made for planting activity and also people are identified who would nurture and take care of such activities. (ii) Along with this, viability check report is procured by the expert team of the applicant in terms of water availability for fruit trees and identification of small and marginal farmers who will be benefitted from the produce of the trees planted. (iii) Thereafter, a nursery is set up in nearby locality or near the identified area where saplings are grown from seeds to be planted in this arena. Nursery lands are taken on lease for 3 to 5 years from the local farmers. The applicant assists the farmers by providing quality saplings which are developed in the said nurseries or purchased from nearby nurseries. (iv) Just after the Rabi and Kharif harvest season, the farmers are encouraged and helped to plant fruit trees in a small part of their land holdings. The applicant provides them all resources and infrastructure, both in terms of monetary as well as non-monetary. (v) The applicant assists the farmers with organic fertilizers and pesticides as required from time to time and also imparts training to the farmers in horticulture. (vi) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of CIT v. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC). It is a landmark case for the understanding of the term agriculture under the Income Tax Act. This judgment makes it clear that the term 'agriculture' is "cultra", i.e., cultivation of the "agar" i.e., field / land. In other word, raising of a product through the use of human skill and labour on land may be classified as agricultural activity. The "product should have some utility either for consumption, for trade and commerce. The term "Agriculture" receives a wider interpretation both with regard to its "operations" as well as the "results" of such operation. 2.9 The applicant submits that in the light of the definition given in the Income Tax Act and above referred landmark decision of the Hon'ble Supreme Court of India on the matter, following ingredients must exist in an Agricultural Income: o Existence of Land, o Ownership of Land is immaterial, o Cultivation of land is must, o The resultant items through basic operation should be in a shape of products either for consumption or for trade. 2.10 The applicant contends that he is engaged in pure agricultural related activities in respect of planta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. No such essence of cultivator activities is found in the nature of work of the applicant. 3.3 Moreover, the Telangana Authority of Advance Ruling, in the cases of Ganga Kaveri Seeds Pvt Ltd and Narasimha Reddy & Sons respectively, has applied the principle of ejusdum generies, that is general words should take colour of the specific words and accordingly these rules held that raw material used in definition of agricultural produce is confined to food, fibre and fuel, which can be consumed but seeds are not consumed but cultivated. The specific words indicate direct consumption by humans or in industry but not in cultivation i.e. supply of seeds does not fall under the definition of agricultural produce as the seeds do not fulfill the utilities as prescribed above. So, any service providing for seeds i.e storage, packaging, load ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of plantation of mangrove seeds is to enhance biodiversity and re-establish ecosystem function to protect the islands and the populace from erosion. 4.3 The applicant is of the opinion that both the aforesaid activities is covered under the term "Agricultural Services" as described in Notification No. 11/2017 - Central Tax (Rate) under Serial No 24 with Heading 9986 and read as "Support Service to agriculture, forestry, etc." having NIL rate of GST. 4.4 The relevant extract of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 is given below for ease of reference: SI.No. Chapter, Section or Heading Description of Service Rate (per cent) Condition (1) (2) (3) (4) (5) 24 Heading 9986 Support services to agriculture, forestry, fishing, animal husbandry. Explanation. - "Support services to agriculture, forestry, fishing, animal husbandry" mean - (i) Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of- (a) agricultural operations directly related to production of any agricultural produce including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poultry farming, pisciculture, and other allied activities, whether or not undertaken jointly with agriculture and the expression "agricultural operations" shall be construed accordingly . Explanation :- For the purposes of this clause, "pisciculture" includes the development of fisheries, both inland and marine, catching of fish and all activities connected therewith or incidental thereto; 4.7 On perusal of the aforesaid definition of 'agriculture', it transpires that horticulture is covered under agriculture. Horticulture is the branch of plant agriculture dealing with garden crops, generally fruits, vegetables, and ornamental plants. The word is derived from the Latin hortus, "garden," and colere, "to cultivate." As a general term, it covers all forms of garden management, but in ordinary use it refers to intensive commercial production. In terms of scale, horticulture falls between domestic gardening and field agriculture, though all forms of cultivation naturally have close links. Horticulture is divided into the cultivation of plants for food (pomology and olericulture) and plants for ornament (floriculture and landscape horticulture). Pomology deals with fruit and nut cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such supply of services may be treated as 'environmental protection services' under chapter Heading 9994 and shall not get covered under chapter Heading 9986 being 'Support services to agriculture, forestry, fishing, animal husbandry'. We agree with the view of the officer concerned from the revenue on this point. 4.12 Serial number 32 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 and corresponding West Bengal Notification No. 1135 F.T dated 28.06.2017, as amended from time to time, specifies that tax shall be levied @ 18% on 'Sewage and waste collection, treatment and disposal and other environmental protection services'. In view of the above discussions, we rule as under: RULING Question: What would be the SAC Code & GST Rate for the outward supply made by the applicant, in case of fruit trees being cultivated and nurtured at marginalised communities? Answer: Supply of services for cultivation, planting and nurturing of fruit trees shall be covered under serial number 24 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 having SAC 9986 and therefore shall attract Nil rate of tax. Question: What would be the SAC Code & GST Rate for the out ..... 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