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.

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.