GST on Rubber and Cardamom

[Prem Gomathy]

Party sells own produce of unprocessed:

1. Cardamom

2. Rubber Latex

3. Natural Rubber

Party is registered under GST for his business activity ( Not agriculture). Is the sale of the above unprocessed items liable for GST?

[ABHISHEK TRIPATHI]

Dear Prem ji,

I think, they are taxable and not under the exemption notification. Refer 1/2017 and 2/2017 - CT (Rate)

[Prem Gomathy]

Dear Sir,

Bur see Sec 23(1) says agriculturist to the extent of supply of produce out of cultivation of land is not liable to get himself registered.

And for the purpose of registration while calculating aggregate turnover of agriculturist, turnover from supply of produce out of cultivation of land is to be excluded.

Further Sec 2(7) of the CGST Act says that agriculturist means an individual or HUF who undertakes cultivation of land by own labour or hired labour.

So for cardamom, are the rates prescribed for sale of processed cardamom or own produce?

[KASTURI SETHI]

Sh.Prem Gomathy Ji,

I humbly opine that you have not read the definition of 'agriculturist or cultivator(farmer) between the lines.

GST @ 5% is leviable on unprocessed cardamom (HSN 090831), unprocessed rubber latex (HSN 400110) and unprocessed natural rubber (4001 21, 400122, 400129), if supplied/sold by other than agriculturist/cultivator/farmer or their hired labour or the family members of farmer. In other words, no exemption is available to dealer, despite being unprocessed.

The definition of 'agriculturist' is restrictive and only those persons who are directly engaged in cultivation of land are eligible for exemption.Section 2 (7) of CGST Act, 2017 explains as under :(7) 

“agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land -

(a) by own labour, or

(b) by the labour of family, or

(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family;

In order to avail exemption, goods must not only be unprocessed (if processed, character of goods must not be changed), but also required to be cleared/supplied by the agriculturist or cultivator. In other words, you may by farmer. Here the clearance from the premises of agriculturist or cultivator has a significance.

Last but not the least, whenever, Sh.Abhishek Tripathi, sir opines treat the reply as fool-proof. In other words, dive deep into his reply.

AI Summary

GST on unprocessed agricultural produce depends on agriculturist status; non agriculturist supplies remain taxable. Exemption from GST for unprocessed cardamom, rubber latex and natural rubber applies only where the supplier is an agriculturist as defined by the CGST Act; turnover from produce is excluded for an agriculturist's registration threshold and such agriculturists need not register for those supplies. Supplies by dealers or other non agriculturists of these unprocessed goods are taxable under the GST rate schedule and are not exempt simply because the goods are unprocessed.