Applicability of GST on cutting charges of paddy straw and Husk straw

[KARAN VERMA]

Sir, I have sold paddy and husk straw to customer for usage in boiler. There is no GST applicable on sale of paddy/husk straw but now I am providing service of cutting of paddy/husk straw along with sale of straw.

My question is whether GST applicable on cutting charges received from customer.

Or it will be exempt under composite supply.

[YAGAY andSUN]

In our view, cereal straw and husks, including rice husks or rice hulls, unpreparred, whether or not chopped, ground, pressed or in the form of pellets fall under HS Code 1213 and attract Nil GST. Rice bran falls under HS Code 2302 and attract NIL GST if suuplied as cattle feed or 5% if supplied for other purposes.

[KARAN VERMA]

ok thanks but what about cutting charges received. Whether GST applicable on it.

[Ganeshan Kalyani]

Sir, the service of cutting of paddy/husk straw is exempted vide entry 54 of Notification no. 12/2017-CTR dated 28.06.2017. The relevant extract of the said entry is given below.

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 agricultural produce by way of-

(a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing;

(b)....

(c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;

[DR.MARIAPPAN GOVINDARAJAN]

I endorsed the views of Yagay and Sun

AI Summary

GST exemption on agricultural processing: cutting charges for paddy and husk straw are covered as exempt services. Charges for cutting paddy and husk straw supplied as goods fall within two operative treatments: the goods themselves are nil-rated agricultural products, and the cutting and similar on-farm processes are exempt as services relating to cultivation and farm processes that do not alter the essential characteristics of the produce, covering operations like cutting, drying, cleaning and trimming to make produce marketable.