Agricultural produce test determines GST exemption for cold storage, with only ordinary farm processing qualifying.

Cold storage exemption for GST depended on whether the goods qualified as agricultural produce: products must arise from cultivation or rearing, retain their essential character, and undergo only ordinary processing needed for primary-market sale. Goods in Group A met this test because only cleaning or removal of impurities was involved, so cold storage services for them were exempt. Goods in Groups B to G had undergone processing such as drying, polishing, shelling, dehusking, cutting, fumigation or grading, which went beyond ordinary farm-level processing and changed the character or added value; cold storage services for those goods were therefore taxable.

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Issues: Whether the goods listed in Groups A to G constituted "agricultural produce" so that cold storage services for them were exempt from GST under the relevant notifications.

Analysis: The exemption applied only where the goods were produce out of cultivation or rearing, retained their essential characteristics, and were subjected only to such processing as is ordinarily done by a cultivator or producer to make them marketable in the primary market. On that test, Group A goods remained agricultural produce where only ordinary cleaning or removal of impurities was involved, because such processing did not change their essential character. By contrast, the goods in Groups B to G underwent processing such as drying, polishing, shelling, dehusking, cutting, cleaning, fumigation, grading or other operations that were not ordinarily carried out by cultivators at farm level and which altered the character of the produce or resulted in value addition beyond primary-market marketability.

Conclusion: Cold storage services for Group A goods were exempt, while cold storage services for Group B to G goods were taxable.

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