2018 (6) TMI 459 - AAR - GST

Cold storage operations for agricultural products classified under SAC 9986 support services, exemption under notification 12/2017 entry 54(e) applies regardless of recipient

The AAR-AP ruled that cold storage operations for agricultural products fall under SAC 9986 (support services to agriculture) rather than SAC 9967 ... Classification of storage and warehousing services - Support services to agriculture - Service-specific exemption under Notification No. 12/2017 (entry 54(e)) - Definition of 'agricultural produce' for exemption - Scope of advance ruling jurisdiction on document requirementsClassification of storage and warehousing services - Support services to agriculture - Storage and warehousing of agricultural produce provided by the applicant is classifiable under SAC 9986 and not under SAC 9967. - HELD THAT: - The authority examined the competing headings and found that heading 9967 relates to supporting services in transport, whereas heading 9986 covers support services to agriculture, forestry, fishing and animal husbandry. The entries under heading 9986 explicitly include loading, unloading, packing, storage or warehousing of agricultural produce as part of support services to cultivation and agricultural operations. In view of the plain language of these entries, the storage and warehousing activity carried out by the applicant falls within the agricultural support services covered by SAC 9986 and not within support services in transport under SAC 9967. [Paras 4, 5]Storage and warehousing of agricultural produce falls under SAC 9986 and not under 9967.Service-specific exemption under Notification No. 12/2017 (entry 54(e)) - Definition of 'agricultural produce' for exemption - The nil-rate exemption under Notification No. 12/2017 (entry 54(e)) applies to storage services of agricultural produce of both farmers and traders, provided the produce falls within the notified definition of 'agricultural produce'. - HELD THAT: - The authority noted that the notification is service-specific rather than person-specific. The circular explaining the notification defines 'agricultural produce' as produce from cultivation or rearing on which either no further processing is done or only processing usually done by a cultivator that does not alter essential characteristics. Where commodities fall within that definition, the support service of storage/warehousing attracts the nil rate under entry 54(e). Consequently, the exemption is available for storage of agricultural produce belonging to both farmers and traders so long as the commodities qualify as 'agricultural produce' as explained in the circular. [Paras 4, 5]Exemption under Notification No. 12/2017 (entry 54(e)) is applicable to agricultural produce of both farmers and traders, subject to the definition of 'agricultural produce.'Scope of advance ruling jurisdiction on document requirements - Whether the authority should specify the documents to be maintained by the cold storage operator for claiming the exemption was not decided on merits; the matter does not fall within the advance ruling authority's purview. - HELD THAT: - The applicant sought guidance on documentary requirements to claim the exemption. The authority observed that specifying the documents to be maintained for claiming the exemption is outside the scope of the advance ruling provisions under the CGST/APGST Acts and therefore declined to rule on that request. [Paras 4]Request to specify documents required to avail the exemption is not within the purview of the advance ruling authority and was not decided.Final Conclusion: The Authority ruled that storage and warehousing of agricultural produce by the applicant is classifiable under SAC 9986 (not 9967) and that the nil-rate exemption under Notification No. 12/2017 (entry 54(e)) applies to agricultural produce of both farmers and traders provided the produce falls within the notified definition; the request to specify documents for claiming the exemption was not entertained as it falls outside the Authority's jurisdiction. Issues: Classification of goods/services, applicability of notification, determination of tax liability, exemption eligibility for farmers and traders, required documents for exemption.Classification of goods/services:The applicant, engaged in cold storage operations for agricultural produce, sought an advance ruling on the classification of goods/services. The authority analyzed the relevant entries under SAC 9986 and 9967, ruling out 9967 as it pertains to support services in transportation. The ruling clarified that storage and warehousing of agricultural produce fall under SAC 9986, which includes services related to agriculture, forestry, fishing, and animal husbandry.Applicability of notification:Regarding the applicability of notification no. 12/2017 Central Tax (Rate), the authority determined that the exemption under entry no. 54(e) is service-specific and not person-specific. Consequently, the exemption is deemed applicable to agricultural produce for both farmers and traders alike. The ruling emphasized that as long as the commodities qualify as agricultural produce as defined in the notification, they attract a nil rate of tax.Determination of tax liability:The applicant also inquired about the tax rates applicable to specific commodities. The authority clarified that commodities falling under the definition of agricultural produce are subject to a nil rate of tax. The ruling highlighted that the exemption under the notification is not restricted to a particular class of persons, extending to both farmers and traders engaging in the storage of agricultural produce.Exemption eligibility for farmers and traders:In response to the applicant's query about the eligibility for exemption under the notification, the ruling confirmed that entry no. 54(e) applies to agricultural produce of both farmers and traders. The authority's decision emphasized the service-specific nature of the exemption, ensuring its equal applicability to all entities involved in the storage of agricultural produce.Required documents for exemption:The applicant also sought guidance on the documents necessary to claim the exemption benefit. However, the authority concluded that the maintenance of such documents does not fall under the purview of the advance ruling authority as per the provisions of the CGST/AP GST Act'2017. Therefore, the ruling did not provide specific requirements for the documents needed to avail the exemption benefit.In conclusion, the authority ruled that the storage and warehousing of agricultural produce fall under SAC 9986, the exemption under notification no. 12/2017 Central Tax (Rate) applies to both farmers and traders, and the maintenance of documents for exemption does not fall under the advance ruling authority's jurisdiction.