Authority for Advance Ruling denies ruling on taxability of transportation charges & Mandi labour reimbursement due to ongoing GST Act investigation.

The Authority for Advance Ruling declined to provide a ruling on the taxability of transportation charges for moving raw paddy and reimbursement of Mandi labour charges as the matters were already under investigation by the Assistant Commissioner under the GST Act. The Authority cited the prohibition under the GST Act from admitting applications where questions are already pending or decided in ongoing proceedings. Consequently, no ruling was issued in this case.

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Issues Involved:
1. Taxability of transportation of raw paddy from the point of purchase to the rice mill.
2. Taxability of the reimbursement of Mandi labour charges.

Issue-wise Detailed Analysis:

1. Taxability of Transportation of Raw Paddy:
The applicant, engaged in custom milling of paddy, sought clarity on whether the transportation charges for moving raw paddy from the purchase point to the rice mill are taxable. The applicant argued that these transportation services are exempt under entry serial number 21 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as they pertain to the transport of agricultural produce by a goods transport agency. However, the revenue authority contended that the transportation of paddy and rice, although conditionally exempted under specific notifications, should be considered as part of a composite supply. Since custom milling of paddy is the principal supply, the entire supply, including transportation, would attract GST at 5%.

2. Taxability of Reimbursement of Mandi Labour Charges:
The applicant also questioned whether the reimbursement of Mandi labour charges is taxable. The applicant believed that these charges should not be subject to GST. However, the revenue authority maintained that all supplies involved in the custom milling process, including labour services for procurement, are interconnected and should be considered a composite supply. Consequently, the reimbursement of Mandi labour charges would also be taxable under the GST Act.

Observations & Findings:
The Authority for Advance Ruling examined the modus operandi of the applicant’s business activities, which involve a tri-partite agreement for custom milling of paddy. The agreement outlines the responsibilities of the applicant, including procurement, storage, milling, and transportation of paddy and rice. The Authority noted that the applicant’s activities are already under investigation by the Assistant Commissioner, State Tax, Serampore Charge, and a notice dated 16.03.2021 had been issued to the applicant regarding these activities.

Ruling:
The Authority for Advance Ruling concluded that it could not provide a ruling on the questions raised by the applicant because the matters are already the subject of ongoing proceedings under the GST Act. The first proviso to sub-section (2) of section 98 of the GST Act prohibits the Authority from admitting applications where the questions are already pending or decided in any proceedings under the Act. Therefore, no ruling was given in this case.

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