GST applicability on sale of residue from food industry

[KARAN VERMA]

Sir

Whether GST applicable on residue from food industry which is used for cattle feed.

[DR.MARIAPPAN GOVINDARAJAN]

In my view 'yes'

[KARAN VERMA]

sir, this residue is directly consumed by animal by mixing with other grass and straw.

[KASTURI SETHI]

Pl. elaborate your query. I remember reply on this issue has already been given in this forum. If you elaborate, that reply can be traced out.

[Ganeshan Kalyani]

GST is applicable on goods as per their HSN classification. One product can be exempt and other can be taxable. So, the name of the product is necessary to locate that product is the relevant notificaiton.

[DR.MARIAPPAN GOVINDARAJAN]

The answer is 'yes' on the common connotation. If you specifically indicate the goods from which the residue comes then it may be different if exemption is available to that goods.

[KARAN VERMA]

waste product is barley waste which is directly consumed by animal as cattle feed.

[Ganeshan Kalyani]

If the goods can be called as 'feed supplement' then it will fall under HSN 2309 and GST is exempt.

[KASTURI SETHI]

I agree with the reply dated 6.7.2020 of Sh.Ganeshan Kalyani Ji.

[Mahir S]

Para No 05 of Board Circular No. 80/54 /2018-GST F. No.354/432/2018-TRU dated 31st December, 2018 provides clarification on the issue as under:

5. Applicable GST rate on Animal Feed Supplements/feed additives from drugs:

5.2 As per the HSN, 2309 interalia covers reading vitamins and provitamins which improve digestion and, more generally, ensure that the animal makes good use of the feeds and safeguard its health. On the other hand, HS code 2936 coves vitamins and provitamins which are medicinal in nature and have much higher concentration of active substance.

5.5 A product deserves classification chapter 29 ( equally applicable to heading 2936), if it is an item of general use, e.g., if a product is of specific use, say dietary supplement for human being product particularly suitable for a specific use rather than for general use. Vitamins and provitamins are normally covered under code heading 2936, but if they’re prepared as food supplements in the form of tablets, etc. they would not be classifiable under this heading as the way they are presented, they are suitable for a specific use. Heading 2309 would cover items like feed supplements for animals that contain vitamins and other ingredients - such as cereals and proteins. These are covered in chapter 23 under heading code 2309, or antibiotic preparations used in animal feeding - for example a dried antibiotic mass on a carrier like cereal middling. The antibiotic content in these items is usually between 8% and 16%. Thus, HS code 2309 would cover only such product, which in the form supplied, are capable of specific use as food supplement for animals and not capable of any general use. If the vitamins, provitamins are supplied in a form in which they are capable of general use, i.e. in the form in which it could be used as inputs or raw materials for further processing, instead of being ready to use, then these would be classifiable under heading 2936.

[Mahir S]

In view of above clarification, I endorse the view expressed by Sh. Ganeshan ji.

[Bhavika Chothani]

Cattle feed is covered under GST. But whether this particular good is exempt or taxable depends upon the further details of the good

[Ganeshan Kalyani]

Thanks Sri Kasturi Sir and Sri Mahir Ji.

[KARAN VERMA]

Sir

The waste product from Alcoholic beverage industry is spent grain of rice, wheat, barley which is directly sold to farmers and farmers used as cattle feed for animals.

[Mahir S]

Yes Karanji I agree with your views

[Mahir S]

The views expressed by Bhavika Madam at Point no 11 in the present scenario is also required to be taken into consideration.

[Mahir S]

Alcohol for human consumption not liable for GST but number of products which emerge during manufacturing process are liable for GST.

These products are supplied to manufacturers of animal feed and are liable for 5 percent GST.

AI Summary

GST classification of cattle feed determines taxability of food industry residues used as animal feed under HSN distinctions. GST applies to food industry residues sold as animal feed depending on classification: ready to use feed supplements presented for direct animal consumption may fall under the feed supplement classification and be exempt, whereas vitamins or substances supplied in forms suitable for general use or as raw inputs are classifiable under headings for chemical or medicinal products and attract different tax treatment; spent grains supplied to feed manufacturers have been treated as taxable supplies subject to the concessional rate for animal feed.