GST Rate on Ground Nuts - Exempt or 5%

[Krishna Murthy]

As per S No 81 of 2/2017 CTR Notification Ground Nuts are exempted from tax when the same is of seed quality. While the Ground Nuts are other than seed quality it is taxable at 5% as per S No 65 of Schedule 1 of Notification No 1/2017. My question is how can the seller or assessing officer determine whether the Ground Nuts are used by the buyer for seed purpose or other than the seed purpose. It is to be noted here that the same quality seed can be used for seed purpose or for oil extraction (other than seed).

Does these provisions mean seed quality should be seen from seller point of view irrespective of usage by the buyer or the seller is supposed to take any declaration from the buyer regarding its usage.

[YAGAY andSUN]

In our view End Use related compliance must be associated with such transaction.

[Ganeshan Kalyani]

Sir, I agree with M/s.Yagay and Sun's reply. The end use determines whether it is seed quality or not. If it is used for sowing then it is seed quality. If it is used for other purpose like extracting oil form it then generally it is not of seed quality.

[Krishna Murthy]

Thank you sir for your reply. But, how can the seller ensure the end usage by the buyer when the buyer can use for any purpose he likes. Does the seller need to take any declaration regarding usage from the buyer since onus is on the seller to prove when exemption is claimed.

[DR.MARIAPPAN GOVINDARAJAN]

You may ask the buyer as to the use of seed and then determine exemption or rate of tax.

[KASTURI SETHI]

Rightly advised by Dr.Govindarajan, Sir. I am of the view that you may ask your buyer to follow the procedure laid down in the following Board's circular:- (Seller can keep the copy of seed certificate ( issued by the jurisdictional Assistant Director Seed Certification ) with him as documentary proof. The burden of proof is cast upon the person who avails exemption to the effect that exemption has been availed correctly as per GST laws.

Seed Certification Tags - GST applicability

Circular No. 100/19/2019-GST, dated 30-4-2019

 

AI Summary

End-use determination of groundnuts governs GST rate: seed use qualifies for exemption, other uses attract a concessional tax rate. Whether groundnuts are exempt or taxable at a concessional rate depends on end use: seed-quality groundnuts used for sowing qualify for exemption, while the same physical quality used for oil extraction or other non-sowing purposes is taxable. Sellers should ascertain and document the buyer's intended use and retain seed certification or a buyer declaration as proof because the burden of proving correct availment of the exemption rests on the person claiming it.