GST on sale and purchase of mustard

[Rajesh Kumar]

Sir/Madam

I want to know about the GST involvement in sale and purchase of Mustard seeds.

1. When an customer buys mustard from the farmers to change into Mustard Oil, who will pay GST ?

2. When a government department Like Hafed purchases mustard from farmers for Oil or further sale, who will pay GST?

3. What is the rate of GST on sale on Mustard seed?
4. If someone purchases mustard from farmer, will he liable to pay GST under RCM?

[KASTURI SETHI]

Mustard seed is an agriculture produce. Hence exempt.

Exemption is available to the farmer and not to Hafed. For further sale by Hafed , Hafed will pay GST @5% under Chapter Heading/Sub-Heading No. 1207 50 10.

Mustard seed is not covered under RCM.

[KASTURI SETHI]

Pl. note that seeds must not be chemically treated & processed. If processed and treated, seeds will not qualify as agriculture produce.

[KASTURI SETHI]

For Rate of tax see Notification No.2/17-CT (R) dated 28.6.17 as amended up to 28.12.21.

[KASTURI SETHI]

Sh.Rajesh Kumar Ji,

AAAR Rajasthan has held that Mustard Seed is NOT Agriculture Produce. Must go through this decision. Extracted below:-

2019 (3) TMI 1010 - APPELLATE AUTHORITY FOR ADVANCE RULING, RAJASTHAN IN RE : SARDAR MAL COLD STORAGE & ICE FACTORY

[Rajesh Kumar]

Sir , it means sale of Mustard seeds is taxable @5% and if directly purchase from the Farmers, GST to be paid by recipients under RCM. Am I right sir ?

[KASTURI SETHI]

Mustard seed is processed goods and hence not eligible as agricultural produce as per above decision. In this scenario, even farmer will pay tax under under FCM and will collect tax from the buyer and deposit with Govt. and subject to threshold exemption. No RCM as replied above.

AI Summary

GST on mustard seeds: processed or treated seeds are taxable while genuine agricultural produce supplies remain exempt.
GST treatment depends on whether mustard seed qualifies as agricultural produce. Unprocessed, untreated seed supplied by a farmer is generally exempt. Chemically treated or processed seeds do not qualify for the exemption and are taxable supplies. Onward sales by non-farmer purchasers are taxable; reverse charge is not applicable. An advance ruling has characterised mustard seed as processed and taxable in similar facts, so liability follows normal forward charge and threshold rules.