TMI Blog2022 (11) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... HAT:- The appellants are in the business of production and sale of agricultural seeds. In the process of production, the applicant outsources certain services such as cleaning, drying, grading and packing to the job workers and stores the seeds in various facilities after processing them. In the process they also transport the seeds by engaging a GTA. The applicant filed an application before the lower authority for a ruling on their activities with reference to exemption / taxability under Goods and Services Tax Act. Since, the ruling of the lower authority was pronounced against the interests of the applicant, they filed the present appeal before this authority. It becomes imperative to analyse the definition of 'agriculture produce'. The primary factory which needs to be understood is that to get into the bracket of agriculture produce for claiming exemption, the main condition is that either no processing is done on the produce or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. In the present case, as per the written submissions, the applicant take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nounced by it under sub-Section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. * * * * * Subject: GST - Appeal filed by M/s Ganga Kaveri Seeds Pvt Ltd., Flat No. 1406 and 1407, 14th floor, Babukhan Estates, Basheerbagh, Hyderabad - Telangana - 500 001, under Section 100 (1) of TGST Act, 2017 against Advance Ruling TSAAR Order No.05/2022, dated 11.2.2022 passed by the Telangana State Authority for Advance Ruling - Order-in-Appeal passed - Regarding. * * * * * 1. The subject appeal has been filed under Section 100 (1) of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as TGST Act, 2017 or the Act , in short) M/s Ganga Kaveri Seeds Pvt Ltd., Flat No. 1406 and 1407, 14th floor, Babukhan Estates, Basheerbagh, Hyderabad - Telangana -500 001(hereinafter referred in short as the appellant ). 2. The appellant is registered under GST having GSTIN number 36AAAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o support services to agriculture, forestry, fishing, animal husbandry engaged by a cultivator and not to services engaged by a seed company. Transportation of seeds from farm to storage facility and then transportation of packed seed from storage facility to distributors is not exempt under sl.no. 21(a) of Notfn No. 12/2017 as this entry provides exemption on transportation services to agricultural produce. If processing is undertaken by an applicant himself for in house seed production, there is no supply and hence exempt. 5. Based on the above observations, the lower authority has ruled as under: Questions Ruling 1) Whether the seeds produced/ procured and processed, packed and sold by the Applicant as seeds for sowing are agricultural produce in terms of the definition under the Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 and 11/2017- Central Tax (Rate) dated 28-062017. Seed is not an agricultural produce in terms of the definition in the said notifications. 2) Whether the storage of the seeds in the leased storage facility/godowns, loading, unlo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on the decision of the Hon'ble Apex Court in the case of The State Of Rajasthan Etc vs Rajasthan Agriculture Input Dealers Association etc., dated 9-71996 wherein it was held that It is undoubtedly true that food grains per se could be used as seeds for being sown and achieving germination, but in that form they retain the dual utility of being as well as seeds. By process of coating and applying insecticides, other chemicals and poisonous substances to food grain meant to be utilized as seed, one of its basic characters, i.e., its consumption as food by human beings or animals or for extraction for the like purpose, gets irretrievably lost and such processed seeds become a commodity distinct form food grains as commonly understood. This observation of the Hon'ble Apex Court makes it clear that the chemically treated seed may not be useful for consumption by human beings or animals as a food grain and may be distinct from the food grain due to its restricted and specified utility, but it does not lose the character of an agriculture produce. Till the chemical processing is taken up the seed retains the character of the agriculture produce on par with any agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural produce there under and Sl.No.24(1)(c), (h) and (iii) of the Notification No. 11/2017- Central Tax (Rate)dated 28-06-2017 read with the definition of agricultural produce thereunder or any other entry/entries of the above notifications. Apart from the transport of seeds from the farm lands to storage facility/godown of the Appellant, transport of seeds from one storage facility/godown of the Appellant to the other storage facility/godown of the Appellant, transport of packed seeds from storage facility/godown of the Appellant to the distributor and transport of sales-returns, if any, (heading No.9965 or 9967) is exempt from payment of GST in terms of Sl.No. 21(a) of the Notification No. 12/2017- Central Tax (Rate)dated 20-06-2017 or any other entry/entries of the above notifications. Therefore, processes undertaken by the applicant, namely, cleaning, drying, grading, treatment with chemicals and packing (heading No.9986), for himself also are generally exempted. Whether the appeal filed in time 7. As per the application, the date of the impugned order is 18.2.2022 and the appeal is filed on 4.3.2022. Hence, the appeal is found to be filed in time. Personal Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing is done on the produce or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. 14. In the present case, as per the written submissions, the applicant takes land on lease and produces agriculture seeds, food grains / vegetables / green vegetables and fruits out of cultivation and out of the produce through harvesting, it segregates part of the agriculture produce based on its quality and germination strength and undertakes preservation process such as clearing, drying, grading and chemical processing to make the seed fit for sowing purpose and to have better shelf life. The applicant has pleaded that till the chemical processing is taken up the seed retains the character of the agriculture produce on par with any agriculture produce and they are entitled for exemption in respect of services availed by them. If the activities of the applicant are only cleaning, drying, grading without involving any chemical processing on the subject produce, then the services would be on agriculture produce and exemption would be available. However, since in this case it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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