Applicability of GST

[Murari Agrawal]

West Bengal govt is giving wheat to Flour Mills for milling/crushing and the resultant fortified Atta is supplied under Public Distribution Scheme. No GST is charged by the Millers since inception. Now the GST officer has issued summons u/s 70 of the CGST Act, 2017 to furnish all records and appear for hearing. There are about 100 millers, none of them has realised GST. Seek expert opinion on applicability of GST, if yes, the rate and whether the previous GST can be realised from the Govt of West Bengal.

[KASTURI SETHI]

Milling of wheat is a manufacturing service. A new product is emerged by the process of milling. It is covered under Chapter/Heading No.1101. It attracts nil rate of GST if supplied in loose form and it attracts GST @ 5% (2.5 % + 2.5%) if supplied in unit container and flour is branded. See Notification No.1/17-CT(R) and 2/17-CT(R) both dated 28.6.17 as amended up to 30.9.2019 (Serial No. 54 & 73 respectively).

Regarding the possibility of exemption from GST or non-levy of GST, go through Notification No.14/17-CT(R) dated 28.6.17 and 16/18-CT(R) dated 26.7.18. Also go through Articles 243 G and 243 W of Constitution of India for the purpose of exemption or non-levy of GST.

If any doubt arises, post your query here again.

[PAWAN KUMAR]

dear sir,

as per my view, it is the milling curshing of wheat is supply of service and is covered under exemption under not. no.12/2017-central tax (rate) S.No.3.

[KASTURI SETHI]

Yes but exemption is conditional.

AI Summary

GST applicability on milling services: treatment and rates depend on whether flour is loose or packaged, with conditional exemptions. Milling of wheat is treated as a manufacturing/service activity producing flour; loose/unpackaged flour attracts nil GST while packaged branded flour attracts a concessional positive rate. Applicable notifications set out these rates and conditional exemptions; some exemptions are conditional. The issue also raises whether historical non-levy by millers can be recovered from the State, with constitutional taxation provisions noted as relevant.