2020 (1) TMI 139 - AAAR - GST

Appeal dismissed: handling imported raw whole yellow peas not exempt under Sl. 54(e) as primary market is foreign

AAAR dismissed the appeal and upheld the WBAAR ruling that the services of handling imported raw whole yellow peas are not exempt under Sl. 54(e) of the ... Agricultural produce or not - raw whole yellow peas - services by way of handling the imported raw whole yellow peas - whether the service exempt under Sl. No. 54(e) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (corresponding State Notification No. 1136 FT dated 28.06.2017), as amended from time to time - challenge to AAR decision - HELD THAT:- There is no dispute that raw whole yellow peas are agricultural produce covered under serial no. 45 of the Rate Notification and are exempted goods. However, this particular consignment of raw whole yellow peas was harvested in foreign land and the concerned primary market or the farmers' market is located in that foreign land - it is observed from a combined reading of entry number 54 of the Exemption Notification and definition 2(d) of the Exemption Notification that all services and processes are excluded beyond the primary market. The term primary market in common parlance refers to farmers market like “mandi” or “arhat” being a place where the farmers directly sell their product to the buyers like wholesalers. millers. food processing units, etc. The spirit of the legislature was intended to boost the agricultural sector of the home country and not that of a foreign land - The primary market in the instant case being located in foreign shores does not conform to the definition as stated above. Further there is no evidence that the grains have not undergone any type of treatment before leaving the foreign country from where they have been imported into India. There are no infirmity in the ruling pronounced by the WBAAR - appeal fails. Issues: Whether the appellant's services of loading, unloading and handling of imported raw whole yellow peas are eligible for exemption under Sl. No. 54(e) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.Analysis: Raw whole yellow peas are listed as exempted goods under Notification No. 2/2017-Central Tax (Rate) and therefore qualify as agricultural produce for the purposes of the exemption framework. The definition of 'agricultural produce' in the Notes to the Exemption Notification (definition 2(d)) limits the exemption to produce on which either no further processing is done or only such processing as is usually done by a cultivator that does not alter its essential characteristics and renders it marketable for the primary market. The term 'primary market' denotes the farmers' market or mandi where farmers directly sell to buyers in the domestic territory. Where the produce is harvested and marketed in a foreign country, the primary market is located outside the domestic territory and services rendered after importation at the port of entry fall beyond the scope of services contemplated by Sl. No. 54(e). In such circumstances, services of loading, unloading and handling performed after the consignment reaches the port of entry are not covered by the exemption even if the goods themselves are listed as agricultural produce.Conclusion: The appellant's services of loading, unloading and handling of the imported consignment of raw whole yellow peas are not eligible for exemption under Sl. No. 54(e) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017; decision is against the appellant and in favour of the Revenue.