2019 (8) TMI 1154 - AAR - GST

Imported Yellow Peas Unloading Services Not Exempt Under GST

In Re: M/s. T.P. Roy Chowdhury & Company Pvt. Ltd.

The court ruled that the Applicant's loading and unloading services for imported yellow peas are not eligible for exemption under the Exemption ... Benefit of exemption from GST - activities related to agriculture produce - service of loading and unloading of imported raw whole yellow peas - Circular No. 16/16/2017-GST dated 15/11/2017 of CBIC - HELD THAT:- Services relating to the cultivation of plants, inter alia, for agricultural produce are exempt under Sl No. 54 of the Exemption Notification and classified under SAC 9986. They include, among others, loading, unloading, packing, storage or warehousing of agricultural produce [clause 54(e) of the Exemption Notification]. The agricultural produce means any produce out of cultivation of plants etc. “for food, fibre, fuel, raw material or other similar products on which either no further processing is done 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. It, therefore, appears that the service of loading, unloading etc. of agricultural produce is admissible for exemption under Sl No. 54(e) of the Exemption Notification, provided such loading/unloading service is related to the cultivation of plants and classifiable under SAC 9986. The scope of such support services extends to post-harvest crop services such as preparation of crops for the primary markets - Circular No. 16/16/2017-GST dated 15/11/2017 of CBIC clarifies that the process of de-husking or splitting of pulses is usually not carried out by farmers or at the farm level but by the pulse millers and, therefore, such products are not to be considered ‘agricultural produce’. The emphasis, therefore, is on the processes and services that are applied till the goods are at the farmer’s hand. As soon as they leave the farmer’s hand and the primary market, the services rendered thereafter are not to be considered related to cultivation of the plant and classifiable under SAC 9986. The Applicant renders the service of loading, unloading etc. after the cargo of yellow peas, imported from a foreign land, reaches the port of entry. The produce has been procured from the farmers in the foreign land and exported to India. Clearly, it is, whether processed in a mill, no longer in the domain of the primary market or at the farmer’s hand. Exemption under Sl.No. 54(e) of the Exemption Notification, therefore, is not applicable to the Applicant’s services. Issues:1. Admissibility of the Application2. Submissions of the Applicant3. Observation & Findings of the AuthorityAdmissibility of the Application:The Applicant, acting as a stevedore handling imported raw whole yellow peas, seeks a ruling on the eligibility for exemption under the Exemption Notification. The questions raised are deemed admissible under section 97(2)(b) of the GST Act as they relate to the services provided as a stevedore. The issues raised are not pending in any proceedings under the GST Act, and the Application is admitted.Submissions of the Applicant:The Applicant handles imported raw whole yellow peas and argues that the broken grain or split kernel percentage is insignificant and does not change the nature of the cargo. They claim the service should be exempt as 'agricultural produce' under the Exemption Notification based on the definition provided.Observation & Findings of the Authority:The Authority notes that services related to the cultivation of plants for agricultural produce are exempt under the Exemption Notification. The loading/unloading of agricultural produce is admissible for exemption if related to plant cultivation. The term 'agricultural produce' includes processes to make the produce marketable in the primary market without altering its essential characteristics. Services beyond the primary market are excluded from this exemption.The Authority clarifies that services rendered after the goods leave the primary market or the farmer's hand are not related to plant cultivation and are not eligible for exemption. As the Applicant's services are provided after the imported yellow peas have left the primary market, the exemption under the Exemption Notification does not apply to their services.Ruling:The Applicant's loading and unloading services for imported yellow peas are not eligible for exemption under the Exemption Notification. The ruling is valid unless declared void under the GST Act provisions.