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Issues: (i) Whether semen sorting services qualify as an exempt service under GST similar to exemption granted to semen doses; (ii) Whether semen sorting services are classifiable under SAC 9986; (iii) In absence of a specific notification or classification, under which HSN/SAC code should semen sorting services be categorised.
Issue (i): Whether semen sorting services qualify as an exempt service under GST similar to exemption granted to semen doses.
Analysis: Semen sorting is an intermediate production process performed on semen belonging to semen stations and returned to them after processing. The activity supports artificial insemination and the rearing of animals, and falls within the scope of support services to animal husbandry. Notification No. 11/2017-Central Tax (Rate) entry for Heading 9986 provides nil rate for intermediate production processes as job work related to rearing of all life forms of animals. Entry No. 55A of Notification No. 12/2017-Central Tax (Rate) and notifications exempting bovine semen demonstrate legislative intent to exempt activities related to artificial insemination.
Conclusion: Semen sorting services are exempt from payment of GST.
Issue (ii): Whether semen sorting services are classifiable under SAC 9986.
Analysis: The service is rendered as job work on goods (semen) belonging to another registered person within the meaning of Section 2(68) of the Central Goods and Services Tax Act, 2017. The service is a specialized intermediate process that supports animal husbandry and artificial insemination. Heading 9986 specifically covers support services to agriculture and animal husbandry, including intermediate production processes carried out as job work related to rearing of animals. Prefatory guidance requires choosing the most specific description where differential treatment is possible.
Conclusion: Semen sorting services are classifiable under SAC 9986.
Issue (iii): In the absence of a specific notification or classification, under which HSN/SAC code should semen sorting services be categorized?
Analysis: A specific heading takes precedence over a residual 'not elsewhere classified' entry. Since Heading 9986 specifically covers intermediate job work processes related to rearing of animals and applies to the services in question, resort to a residual entry is not warranted.
Conclusion: Not applicable in view of the rulings on Issues (i) and (ii).
Final Conclusion: Semen sorting services are support services to animal husbandry and qualify as job work; they are exempt from GST and are to be classified under SAC 9986 rather than under any residual SAC.
Ratio Decidendi: Where a service is an intermediate production process performed as job work on goods belonging to another registered person and specifically falls within a heading providing exemption, the specific heading (here Heading 9986) prevails over residual 'not elsewhere classified' entries, entitling the service to the exemption prescribed by the relevant notification.
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