Taxability of Milk Chilling & Storage Charges

[Sanjeev Agrawal]

As per Notification No. 12/2017 dated 28 June, 2017

Agriculture produce means " Any produce out of cultivation of plants and rearing of all life forms of animals except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done of such processing is done as is usually done by a cultivator or producer which does not alter its essential charateristics but makes it marketable for primary market."

As per S. no. 54 Any services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agriculture produce by way of:

(e) loading, unloading, packing, storage or warehousing of agriculture produce. is exempt from GST.

As per above definition of Agriculture produce milk is covered under the definition of agriculture produce as it is a produce out of rearing of animals. Further, chilling of 'milk' is the mandatory requirement for storage/warehousing of milk to maintain the essential charateristics.

Whether it should be covered under the above mentioned serial no for exemption.

AI Summary

Milk chilling as exempt agricultural produce service; storage-related charges may not attract GST where characteristics remain unchanged.
Whether chilling and storage charges for milk are exempt as services relating to agricultural produce is contested. The notification's definition covers produce from rearing animals and exempts storage/warehousing services; chilling is argued to preserve milk's essential characteristics and thus to constitute part of storage rather than a separate taxable service. Tribunal decisions treating chilling as non-manufacturing and non-taxable are noted, and a departmental petition for higher review is pending.