Post-harvest storage exemption covers ancillary mandi works; regulatory functions of Mandi Samiti are not commercial.

Purposive interpretation of the post-harvest storage infrastructure exemption under Notification No. 25/2012-ST extended it to construction and allied works such as roads, toilets and related facilities supporting agricultural produce storage at a mandi. Those works were treated as part of the underlying infrastructure necessary for post-harvest use, so the exemption applied. The Mandi Samiti's functions were also characterised as regulatory and public in nature, not commerce, industry or business, so its activities could not be treated as commercial to deny the exemption. The exemption for the works executed for the Mandi Samiti was therefore upheld.

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Issues: (i) Whether construction and allied works such as roads, toilets and similar facilities provided to the Krishi Utpadan Mandi Samiti fell within the exemption for post-harvest storage infrastructure under Notification No. 25/2012-ST dated 20.06.2012. (ii) Whether the activities of the Mandi Samiti could be treated as commercial so as to deny the exemption.

Issue (i): Whether construction and allied works such as roads, toilets and similar facilities provided to the Krishi Utpadan Mandi Samiti fell within the exemption for post-harvest storage infrastructure under Notification No. 25/2012-ST dated 20.06.2012.

Analysis: The exemption covered services by way of construction, erection, commissioning or installation of original works pertaining to post-harvest storage infrastructure for agricultural produce. The expression "infrastructure" was given a purposive meaning and was held to include the underlying framework necessary for storage of agricultural produce after harvesting, not merely market sheds or storage buildings. Since the works in question supported the storage and use of the market area for agricultural produce, they were treated as part of the exempt infrastructure.

Conclusion: The construction and allied works were held to be covered by the exemption.

Issue (ii): Whether the activities of the Mandi Samiti could be treated as commercial so as to deny the exemption.

Analysis: The statutory scheme of the Mandi Samiti showed that its functions were regulatory and public in nature, including regulation of sale and purchase of agricultural produce, provision of amenities, and construction and maintenance of market facilities. Those functions were not regarded as commerce, industry or business. On that basis, the finding that the Mandi Samiti's activities were commercial was disapproved.

Conclusion: The activities of the Mandi Samiti were held not to be commercial for the purpose of denying the exemption.

Final Conclusion: The exemption under the notification was upheld for the works executed for the Mandi Samiti, and the challenge to the tribunal's order failed.

Ratio Decidendi: An exemption for post-harvest storage infrastructure must be interpreted purposively to include ancillary works necessary for that infrastructure, and a statutory mandi body performing regulatory functions for agricultural produce is not to be treated as engaged in commercial activity for denying such exemption.

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