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of <h1>GST Rates for Tobacco Leaves Clarified by AAR: 5% for Procurement and Graded, 28% for Re-Dried</h1> <h3>In Re: M/s. Maddi Lakshmaiah and Company Private Limited</h3> In Re: M/s. Maddi Lakshmaiah and Company Private Limited - 2020 (32) G. S. T. L. 277 (A. A. R. - GST - A. P.) Issues Involved:1. GST rate on tobacco leaves procured from auction platforms or directly from farmers.2. GST rate on tobacco leaves purchased from other dealers for trading.3. GST rate on graded tobacco leaves.4. GST rate on butted tobacco leaves.5. GST rate on re-dried tobacco leaves without threshing.6. GST rate on threshed and re-dried tobacco leaves.7. GST rate on threshed and re-dried tobacco leaves processed on a job work basis.Issue-wise Detailed Analysis:1. GST Rate on Tobacco Leaves Procured from Auction Platforms or Directly from Farmers:The Authority for Advance Ruling (AAR) determined that the GST rate applicable on tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves, is 5%. This rate is prescribed under Notification No. 4/2017 Central Tax (Rate).2. GST Rate on Tobacco Leaves Purchased from Other Dealers for Trading:The applicable GST rate for tobacco leaves purchased from other dealers who have sourced them from farmers for trading purposes is 5%. This is in accordance with SI.No.109 of Schedule I of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017.3. GST Rate on Graded Tobacco Leaves:When the applicant segregates the tobacco into grades based on size, color/shade, length, texture, etc., and sells such graded tobacco leaves, the applicable GST rate is 5%. This falls under SI.No.109 of Schedule I of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017.4. GST Rate on Butted Tobacco Leaves:The GST rate for tobacco leaves that are butted and sold to other dealers is also 5%, as per SI.No.109 of Schedule I of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017.5. GST Rate on Re-dried Tobacco Leaves Without Threshing:If the applicant gets the tobacco leaves re-dried without threshing, the applicable GST rate remains 5%, in line with SI.No.109 of Schedule I of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017.6. GST Rate on Threshed and Re-dried Tobacco Leaves:The GST rate applicable if the applicant gets the tobacco leaves threshed and re-dried is 28%. This is specified under SI.No. 13 of Schedule IV of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017.7. GST Rate on Threshed and Re-dried Tobacco Leaves Processed on Job Work Basis:For tobacco leaves that are threshed and re-dried on a job work basis at others' premises and then sold, the applicable GST rate is 28%, as per SI.No. 13 of Schedule IV of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017.Conclusion:The AAR provided a detailed analysis of the GST rates applicable to various stages and forms of tobacco leaves handled by the applicant. The ruling clarified that the GST rate is 5% for most forms of tobacco leaves, except for threshed and re-dried tobacco leaves, which attract a higher GST rate of 28%. This distinction is crucial for compliance and accurate tax calculation in the tobacco trade.
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