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of <h1>Exclusive PDS Grain Distribution Agreement: Exemption for Supply of Grains</h1> <h3>In Re: Sakshi Jhajharia</h3> In Re: Sakshi Jhajharia - 2020 (34) G. S. T. L. 374 (A. A. R. - GST - W. B.) Issues involved:1. Admissibility of the Application2. Submission of the Applicant3. Observations & Findings of the AuthorityAdmissibility of the Application:The Applicant sought a ruling on whether supplying the service of crushing food grains to the State Government for distribution through the Public Distribution System (PDS) is exempt under specific notifications. The question was deemed admissible under the GST Act as the Applicant was unregistered, and the requirements under the Act were dispensed with.Submission of the Applicant:The Applicant clarified that they would only provide the service of crushing food grains, with the State Government retaining ownership of the grains. The Applicant argued that this service falls under a function entrusted to a Panchayat under the Constitution and should be exempt under relevant notifications. They highlighted that the crushing of grains is related to PDS distribution, covered under the Constitution.Observations & Findings of the Authority:The Authority referred to a Circular clarifying the exemption for services provided to the government under previous notifications, which continued under the GST regime. They emphasized that the supply should be a pure service or a composite supply not exceeding 25% of goods' value. The Authority analyzed the Applicant's case as a composite supply of crushing grains and providing packing materials, with the former being the principal supply. They concluded that if the agreement binds both parties to distribute grains through PDS, the supply would be exempt under specific notifications.Ruling:The Authority ruled that if the agreement binds both the Applicant and the State Government to distribute grains through PDS exclusively, the supply of crushing and delivering grains will be exempt under relevant notifications, provided the value of packing materials in the composite supply does not exceed 25%.This ruling remains valid unless declared void under the GST Act provisions.
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