TaxTMI 
TaxTMI 
2019 (8) TMI 1287
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....District, Tamil Nadu (hereinafter referred to as 'the appellant'). The appellant is a Society registered under the Tamil Nadu Societies Registration Act and is functioning under the Marine Products Export Development Authority, Ministry of Commerce & Industry, Government of India. The appeal is filed against the Order No.9/AAR/2019 dated 23.01.2019 = 2019 (3) TMI 1074 - AUTHORITY FOR ADVANCE RULING, TAMILNADU passed by the Tamilnadu State Authority for Advance ruling on the application for advance ruling filed by the appellant. 2. The appellant has stated that presently their operations are carried out in Andaman & Nicobar Islands, Kerala and Andhra Pradesh in addition to Tamil Nadu and their operations could be extended to other states of India also. The main activities carried over by them are: (a) Research and Development for general public (b) Providing Consultancy Service with respect to Marine Service (c) Testing Services (All types of testing services) with respect to agriculture and marine products (d) Training the Farmers, Entrepreneurs, Self- help groups, Students, Hatchery owners etc. (e) Sale of Fish, Crab (all kinds of se....
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....rom CGST under Sl. No. 19 of Notification No.2/2017-C.T. (Rate) dated 28.06.2017 as amended and from SGST under Sl. No. 19 of Notification vide G.O. (Ms) No. 63 dated 29.06.2017 as amended. c. Artemia cysts supplied by RGCA, classifiable under 0511, are taxable at 2.5% CGST under Sl. No.21 of Notification No. 1/2017-C.T. (Rate) dated 2806.2017 as amended and at 2.5% SGST under Sl. No.21 of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. d. Research and development activities of RGCA are towards breeding, developing new species, genetic testing of Seed and adults of diversified aquaculture species, Gene sequencing for confirmation of species, under SAC 9981, are taxable at 9% CGST under Sl. no 18 of Notification No 11/2017 dt 28.06.2017 as amended and 9% SGST under Sl. no 18 of Notification No. II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. e. Consultancy services of RGCA are towards nursery cage farming hatching etc. which are support services for rearing of fish, crab, prawn, etc. and are directly related to operations, classifiable under SAC 9986, are exempt from CGST under Sl no. ....
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....ce Tax provisions and brought the fact of receipt of the said order to the notice of the appropriate higher officer only in the third week of April 2019 and as they being controlled by the government, they had to process the file to obtain necessary approval. They have further stated that they have a very fair chance to succeed in the appeal preferred by them. They have relied on the decision of Hon'ble Supreme Court of India in the case of Esha Bhattachajee Vs Managing Committee of Raghunathpur Nafar Academy and others [(2013) 12 SCC 649] =2015 (1) TMI 1053 - SUPREME COURT wherein it is stated that such delay is required to be condoned in the interest of justice. They have prayed that this learned Appellate Advance Ruling Authority may be pleased to take this appeal on record condoning the short delay and render justice. 6. On merits of the case, they have furnished the following as grounds of this appeal: a. The learned TNARA ought to have noted that sustainable technologies mean the technologies which meet the needs of the present without compromising the need of future generations to meet their own needs and hence the sustainable technologies on one hand caters the ....
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....s for prawns and ought to have been so classified. These embryos may not be proper prawn feed at the time of importation but could become so, after incubation. Refusing to classify the product as prawn feed on this basis is not reasonable. In deducing the above principle, I have taken a lot of guidance from the case of 'Commissioner of Income-tax. v. Venkateshwara Hatcheries (P.) Ltd. reported in (1999) 237 ITR 174 (SC.) = 1999 (3) TMI 12 - SUPREME COURT (Supra)'. Had the learned TNARA noted the above facts and followed the above decision of the Hon'ble Calcutta High Court, they ought to have seen that the impugned Artemia cysts are exempt from CGST vide sl.no. 102 of Notification No.2/2017- CT (Rate) and from TNGST under the corresponding Notification as feed including shrimp feed and prawn feed'. c. The learned TNARA ought to have noted that the term agriculture covers not only cultivation of land and growing crops but includes animal husbandry, raising of livestock, etc. The very fact, Govt. of India, Ministry of Agriculture enacted Coastal Aquaculture Authority Act, 2005 and the Regulatory Authority was created under this Act, which deals with improvement of A....
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....ce the said training is eligible for the exemption provided vide sl.no. No. 54 of Notification No. 12/2017 -CT (Rate) read with clause (f) thereto. e. The learned TNARA ought to have noted and followed the order of the Commissioner (Appeals), Guntur vide Order-in-Appeal No.GUN-EXCUS-0000165-16-17 dt.30.01.2017, the appeal against which filed by the department was rejected by the Hon'ble CESTAT vide Final Order No. A/31014-31035/2018 dt.20.08.2018, holding that the appellant's 'activity of research and development of aquatic farms and dissemination developed techniques to the field aptly falls under the scope of definition of 'agricultural extension' and thereby falls under negative list vide 66D(d)(vi) of the Act' and noting that the definition of the term 'agricultural extension' vide definition (c) in Notification No. 12/2017- f. Had the learned TNARA seen the motto and activities the appellant as a whole instead of vivisecting the activities in the spirit of Section 8(a) of the CGST Act and the above Order-in-appeal of the learned Commissioner (Appeals) which has attained finality, they ought to have concluded keeping in view the motto and activities of the app....
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.... by following the judgment of the Hon'ble Supreme Court of India in the case of Esha Bhattacharjee Vs Managing Committee of Raghunathpur Nafar Academy and others [(2013) 12 SCC 649] = 2015 (1) TMI 1053 - SUPREME COURT. b. They are a society registered under the Society Registration Act, duly registered and recognized as a charitable institution with no profit no loss basis. The appellant is an institution funded by the Marine Products Export Development Authority [MPEDA for short] under the Ministry of Commerce and is governed by an executive committee comprising of members from various ministries and Departments of both Central and State Governments including from MPEDA, MoC&I, ICAR, DBT, MOA and the various commissioners of fisheries of the AP, TN and Gujarat and the Directors of Fisheries of the state of Kerala, Tamil Nadu, Andaman Nicobar, UT of Puducherry, AP. c. Under the Finance Act, 1994 a dispute was raised by the Guntur Central Excise Commissionerate that they were liable to pay the service tax on the receipt of consultancy from the overseas entities which ultimately was settled in their favour by the Commissioner of Service Tax (Appeals) Guntur holding ....
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....he aquatic cultivated by them and is generally not sold by them except for a few occasional sales to few farmers involving amounts of less than Rs. 20 lakhs per annum. They undertake a series of process to prepare the feed and store in nitrogen filled boxes. These feeds have also to be used immediately on opening of the box and fed immediately for consumption by the shrimps cultivated by them, Thus the Artemia cysts processed by them is nothing but a animal feed classifiable only under Chapter 23 of CTA. The said classification denied by the advance ruling authority on the ground that it has not lost its essential character and that it is also not fit for human consumption defies all logic and legality. The reading of chapter heading 05.11 under which the authority below had classified the said item is totally inappropriate as it does not meet any of the requirements of the entries provided under heading 05.11 which basically covers waste and dead animals whereas the product in question is an item prepared exclusively as an animal feed. The authorities below failed to see that the heading 2309 includes not only the vegetable or animal material which have lost the essential characte....
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....testing seed (babies) and adults of diversified aquaculture species viz. fish, prawn, crab etc. and gene sequencing of spices and (c) Training the students and academia are covered by the Order-in-Appeal No.GUN-EXCUS-00-0155-16-17 dt.30.01.2017 passed by the Commissioner (Appeals), Guntur since the appeal against which filed by the department was rejected by the Hon'ble CESTAT vide Final Order No. A/31014-31035/201.8 dt.20.08.2018. Imparting of the training to trainers was in the interest of spreading the knowledge in the larger spectrum and more so the fact that they do not impart the training on a commercial basis that is for earning a profit all the more require this activity to be granted the exemption in terms of serial no. 1 of notification 12/2017 (rate) also. o if the motto and activities of the appellant is seen, understood and appreciated as a whole in the spirit of Section 8(a) of the CGST Act instead of vivisecting the activities and in the light of the above Order-in-appeal, the fact the appellant is a Society registered for carrying out the policies and program of the Government in marine products development and the fact that the appellant is regist....
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....g it totally distinguishable to the facts of the case of the appellant. On the other hand, the observations of the Mumbai Bench of the Tribunal confirming that after processing and conversion into larvae the eggs would become edible for prawns as feed by itself support the case of the appellant. The judgment of the Hon'ble Calcutta High Court reported in 2010 (256) ELT 358 (Cal) relied in support by the appellant is a later judgment which in fact considered the decision of the Mumbai Bench decision before making their observations as pointed out to direct the authorities to follow their observation and decide the case is more apt and squarely applicable to the case of the appellant on account of which the contrary finding recorded by the advance ruling authority touching the classification of the subject goods need to be vacated in the interest of justice. b. RESEARCH & DEVELOPMENT (Reverse charge): The advance ruling authority rejected their claim for benefit of serial no. 54 of notification no. 12/2017 (rate) on the ground that the services related to breeding and developing new species which is covered by SAC 9981 liable to payment of the GST @ 18% in terms of notification No....
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....services as falling within the ambit of the agricultural extension services considering that the testing services ultimately result in imparting knowledge to the farmers rearing or cultivating the shrimp or prawns d. TRAINING SERVICES: considering SAC 999293 only covers commercial training and coaching services, which abundantly show that unless the activities is commercial in nature the same would not part-take the character of a taxable service to be made liable for the payment of the GST. The term "commercial" therefore assumes greater importance in the interpretation of the taxable entry. The settled position of law is that the term commercial means primarily involving profit as the motive. In fact the appellant submit that when service tax levy was imposed on commercial coaching and training services for the first time the dispute as to whether the imparting of the service by educational institutions charging fee from the students would attract the taxable entry was considered by the Madras Bench of the Tribunal in the case of Great Lakes institute of management Ltd., reported in 2008 (10) STR 202 (Tri. -Chennai) = 2008 (1) TMI 75 - CESTAT,CHENNAI in which the Tribunal afte....
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....roject: Artemia is a very good live food for Aquatic cultivable organisms. Adult artemia also called Artemia biomass is food for adult/ brooder fish and shrimps. Adult artemia are harvested from ponds when required. They are frozen and stored in -22 degree centigrade. This can also be dried as 'artemia flakes' and stored in polythene covers. Adult artemia size is 1 - 1.5 cm. Artemia lays cysts/ eggs after 13-15 days of maturation. This Artemia cyst can be preserved and kept for any no. of years, if it is packed in vacuum tin/ nitrogen filled tins. Once tins are opened, the nitrogen might escape. The cyst may absorb atmospheric moisture and get soaked/ or get oxidized, hence, it should be used within limited period. The cyst size is 200-210 micron. One gram contains 2,60,000 3,10,000 nos. of cyst. Artemia cyst cannot be consumed with outer shell/chorion as such. It cannot be digested. The cysts are incubated in seawater with light and aeration. The Artemia tiny microscopic artemia nauplii comes out from cyst after 15 -20 hrs. Artemia nauplii is the feed for fish & shrimp larvae. Artemia Nauplii size is 410-425 micron. These artemia nauplii come from / hatched out from Artemia cyst (....
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.... operations are carried out in Andaman & Nicobar Islands, Kerala and Andhra Pradesh in addition to Tamil Nadu and their operations could be extended to other states of India also. The main activities carried over by them are: (a) Research and Development for general public (b) Providing Consultancy Service with respect to Marine Service (c) Testing Services (All types of testing services) with respect to agriculture and marine products (d) Training the Farmers, Entrepreneurs, Self-help groups, Students, Hatchery owners etc. (e) Sale of Fish, Crab (all kinds of seeds) (f) Sale of Harvest- Fish (g) Sale of Artemia-Fish Feed (production and sales) They entertained a view that none of their above activities could be made liable for the payment of the GST and consequently they may not be required to be registered under GST law at all. They filed an Application (GST ARA-01) with the Tamil Nadu Advance Ruling Authority (hereinafter referred to as 'the learned TNARA') seeking advance ruling on the following questions:. 1. Considering the nature of transactions carried out by RGCA and various exemption notification(s....
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....2 in as much as the SAC covers only 'commercial training' and these are also not 'Agricultural extension Services' and therefore exempted vide Entry No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended. 6. Whether Artemia Cyst is classifiable under CTH 05.11 under CTH 2309 or CTH 03 All these points boil down to two major issues; i) the authorities below have not properly taken into consideration and extended to them the benefit of the exemption under serial no. 1 and 54 of notification no. 12/2017 -C.T.(rate). ii) the classification of Artemia Cyst which done by the original Advance Ruling Authority under CTH 0511 is incorrect while they claim that it falls under CTH 2309 or CTH 03. 9. Prima facie, we find that the appeal is filed with a delay of 13 days. As per proviso to Section 100(2), the Appellate Authority if satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the appeal period of thirty days can allow it to be presented within a further period not exceeding thirty days. The appeal is filed within the further period of thirty days provided in the said proviso. The appellant h....
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.... taken support of certain judgments with respect to their claim against their second point of appeal. We consider the issues sequentially below. I. The authorities below have not properly taken into consideration and extended to them the benefit of the exemption under serial no. 1 and 54 of notification no. 12/2017 -C.T.(rate). 10.1 Sl.No.1 of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 exempts 'Services by an entity registered under Section 12AA of the Income Tax Act, 1961 by way of charitable activities' "charitable activities" has been defined in Para 2(r) of the said Notification, as under (relevant entries):- (r) "charitable activities" means activities relating to - (iv) preservation of environment including watershed, forests and wildlife; We find that the Constitution Bench of the Hon'ble Supreme Court in the case of Commissioner of Customs(Import) Mumbai Vs. M/s. Dilip Kumar And Co.& others in C.A. No.3327 of 2007 [2018 (361) E.L.T. 577 (S.C.)] = 2018 (7) TMI 1826 - SUPREME COURT, has dealt with the question What is the interpretative rule to be applied while interpreting a tax exemption provision/ notificatio....
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....fined to activities relating to the preservation of environment including watershed, forests and wildlife. None of the activities undertaken by them and listed at para 8 above were found related to the preservation of environment including watershed, forests and wildlife, by the lower authority. We examine the issue. 10.2 The appellant is of the opinion that they are preserving the environment by preserving wildlife and have tried to understand the meaning of 'wild life' appearing at Para 2(r) of Notification No. 12/2017 -C.T. (Rate) by relying on the definition of 'Wild life' under Sec. 2 (37) of the Wild Life Act, 1972 which states "wild life' includes any animal, aquatic or land vegetation which forms part of any habitat', The appellant has claimed that their entire activities are to be seen as done in relation to develop sustained technology for preserving the environment. This attempt to understand the provisions of an exemption notification under one Act with reference to a definition found in another other Act which is not in pari-materia, is as discussed with case laws above, not a correct approach. When a term is not defined in a statute or exemption notification, it ha....
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....the society, do not conduct activities covered under the preservation of environment including watershed, forests and wildlife. From the activities undertaken by them, we find that the appellant imports R & D technologies, uses the same for augmenting the export potential of the aqua products, which is the main aim of the formation of the appellant. All the training, testing, supply of seeds, fish, etc are done for a charge and are commercial in nature. Preservation of the environment is not their stated objective. The activities undertaken by the appellant is of diverse nature ranging from sensitizing farmers/ entrepreneurs; training students/ academia; undertaking testing for pathogens, quality of farms; supply of fish seeds; artemia Cyst(processed) for fish feed; etc.. The exemption provided at Sl.No. 1 of Notification No. 12/2017-C.T.(Rate) exempts payment of GST only in respect of services provided by way of 'Charitable activities' relating to 'Preservation of environment including watershed, forests and wildlife' (entry related to the proceedings in hand) and the construction of the exemption is not to provide exemption to all the activities undertaken by an entity registered....
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.... 11. The next issue before us, pertaining to the above notification, is whether the Research and development activities imported by the appellant is covered under 'agricultural extension service-SAC 9986' and exempted vide Entry No. 54 of Notification No. 12/2017 -C. T. (Rate) dated 28.06.2017 as amended. It is stated that R&D activities of RGCA entering into/ engaging experts/ consultants outside India who are having either Techn010U or experience in the field of Aquaculture to set up Aquaculture facilities in line with objectives of RGCA to disseminate such Techn010U throughout India. These engagements are in the nature of collaborative Agreements to bring best Technology available in any part of world of Aquaculture. The appellant in support of their above contention that the service are to be classified as agricultural extension service rely upon Order-in-Appeal No.GUN-EXCUS-000-0165-16-17 dt.30.01.2017 passed by the Commissioner (Appeals), Guntur in their own case and which order they claim to have attained finality by the dismissal of the appeal filed by the department consequent to the withdrawal of the appeal by the revenue, vide Final Order No A/31014-31035/2018 dt.20.08....
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....er. (2) Where, in pursuance of the orders or instructions or directions, issued under sub-section (1), the Central Excise Officer has not filed an appeal, application, revision or reference against any decision or order passed under the provisions of this Act, it shall not preclude such Central Excise Officer from filing appeal, application, revision or reference in any other case involving the same or similar issues or questions of law. (3) Notwithstanding the fact that no appeal, application, revision or reference has been filed by the Central Excise Officer pursuant to the orders or instructions or directions issued under sub-section (1), no person being a party in appeal application, revision or reference shall contend that the Central Excise Officer has acquiesced in the decision on the disputed issue by not filing appeal, application, revision or reference. (4) The Commissioner (Appeals) or the Appellate Tribunal or Court hearing such appeal, application, revision or reference shall have regard to the circumstances under which appeal, application, revision or reference was not filed by the Central Excise Officer in pursuance of the orders or instruc....
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.... 12.1 Entry No.54 of Notification No. 12/2017 -CT (Rate). is specific and the same is given as under: SI. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 54 Heading 9986 Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of- (a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; (b) supply of farm labour; (c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter die essential characteristics of agricultural produce but make it only marketable for the primary market; (d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (e) loading, unloading, pac....
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....f exemption under Sl.No. 54 of Notification no. 12/2017-C.T.(Rate) dated 28.06.2017 as amended. 13.2 From the submissions before us, we observe that the appellant in their application before the Original Authority under Q.No. 4 have sought the tax rates applicable to their transactions, if the activity is taxable. The original authority has classified the activities and has answered the applicable rate of tax. The original authority has held that the training activities under consideration, is classifiable under SAC 9992, more specifically under '999293- Commercial training and coaching services' and has ruled the applicable rate of tax. Before, considering the contention of the appellant that the activity undertaken by them do not merit the specific six-digit classification under SAC 999293, we would like to consider the structure of classification under GST, related to the Section heading 9992 and decide whether there is a necessity to go for specific 'Service Description' or 'Group' based classification to answer the question raised by the appellant in the application, i.e., the applicable rate of tax on the transaction, if held taxable. 13.3 We find that the 'Education Se....
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....ity is exempted by the service description? 13.4 In the case at hand, it is not disputed that the training extended by the appellant to student, academia, etc for a charge, is the activity of training / imparting the skill in aquaculture. The entire spectra of Education (Primary, Secondary, Higher), Specialized education, Other education and training services are covered under SAC 9992. Even if the activity of the appellant is considered as not covered under the specific heading "999293-Commercial Training and Coaching" the activity, is still classifiable under the same heading 9992 in SAC 999294 as "other Education and Training Service nowhere else classified" and the supply is taxable to GST at the appropriate rates. In as much as it is decided that the training extended to students, academia, self-help group, etc for a charge is supply of services grouped under the Service Group-99929 and the Rate Notification specifies the rate based on the Section Head(SAC 9992), we do not find any further need to ponder on the classification of the activity as the same was not a päl of their specific request for an advance ruling originally and therefore do not do so. In view of the a....
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....human consumption. The relevant entry is as below: 0306 CRUSTACEANS, WHETHER IN SHELL OR NOT, LIVE, FRESH, CHILLED, FROZEN, DRIED, SALTED OR IN BRINE; SMOKED CRUSTACEANS, WHETHER IN SHELL OR NOT, WHETHER OR NOT COOKED BEFORE OR DURING THE SMOKING PROCESS; CRUSTACEANS, IN SHELL, COOKED BY STEAMING OR BY BOILING IN WATER, WHETHER OR NOT CHILLED, FROZEN, DRIED, SALTED OR IN BRINE; FLOURS, MEALS AND PELLETS OF CRUSTACEANS, FIT FOR HUMAN CONSUMPTION In the instant case the product though a crustacean, is not fit for human consumption therefore do not fall under this CTH, as per the description of the tariff heading. The other competing Tariff head claimed by the appellant is CTH 2309. Chapter Note to chapter 23 reads as follows: Heading 2309 includes products of a kind used in animal feeding, not elsewhere specified or included, vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, other than vegetable waste, vegetable residues and by-products of such processing. (emphasis supplied) To be classified under CTH 2309, the product should not be specified elsewhere, should be obtained by processing ani....
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................................ (5) Inedible fish eggs, roes and milt. These comprise:- (i) Fertile eggs for hatching, recognisable by the presence of black spots which are the embryonic eyes. (ii) Salted roes (e.g., of cod or mackerel) used as fishing bait. These can be distinguished from caviar substitutes (heading 16.04) by their strong disagreeable odour and because they are usually packed in bulk. The heading excludes edible roes and milt (Chapter 3). On a joint reading of the above notes from HSN and applying the same to the case at hand, the artemia are fertilized eggs for hatching, which is very much covered under CTH 0511 and we do not find any reason to deviate from the ruling of the lower authority on this. 14.2 The appellant has relied on the decision in the case of Atherton Engg P. Ltd Vs. Commissioner [2010 (256) ELT 358 (Cal.)] = 2010 (3) TMI 707 - CALCUTTA HIGH COURT, wherein the Hon'ble High Court while setting aside the order of Tribunal dated 02.03.2006 [2007 (208) E.L.T. 464 (Tri.-Kolkata)] = 2006 (3) TMI 669 - CESTAT, KOLKATA with a direction to Commissioner of Customs to rehear and re-decide the matter, has opine....
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....he matter is not required to be remanded to the commissioner as held by Member (Judicial). With regard to the penalties, after intervention of the Hon'ble High Court at Calcutta in writ Petition No. 2013 of 2005, has decided that the matter does not require remanding for reconsideration and has set aside the penalties. According vide the Final Order dated 02.03.2006 [2007 (208) E.L.T. 464 (Tri.-Kolkata) = 2006 (3) TMI 669 - CESTAT, KOLKATA, the demand of duty is confirmed and the penalties imposed are set aside. The decision of High Court at Kolkatta referred to by the appellant is against this Order wherein the Hon'ble High Court has remanded the issue to re-hear and re-decide the case. 14.3 During the hearing it was pointed out to the appellant that the Hon'ble Supreme Court in the case of Atherton Engg P. Ltd., versus Commissioner reported in 2002 (144) ELT A293 (SC) = 2002 (4) TMI 965 - SC ORDER have approved the decision of the Mumbai Tribunal in the case of Commissioner versus Atherton Engg P. Ltd., reported in 2001 (129) ELT 502 (Tri. -Mum) = 2001 (1) TMI 332 - CEGAT, MUMBAI holding that live Artemia cyst are classifiable under heading 05.11. The appellant in their furthe....