2021 (1) TMI 698

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....gistered under the GST vide GSTIN No. 33AAIPJ6250H1ZV. They have sought Advance Ruling on the following questions: 1. Whether the following supply of services provided by the applicant are in relation to agricultural operations directly in connection with raising of agricultural produce: i. Drilling of Borewells for supply of water for agricultural operations like cultivation including seeding, planting and ploughing. ii. Letting out of compressors for pumping of water from the borewells to the agricultural fields. 2. If the answer to the above question is in the affirmative, whether the said services are covered by the entry SI.No54 of Notification 12/2017 CT(Rate) dated 28.06.2017 The applicant has submitted the copy of the application in Form GST ARA-01 and also submitted a copy of challan evidencing payment of application fees of Rs. 5000/- each under sub-rule(1) of Rule 104 of CGST Rule 2017 and SGST Rules 2017. 2.1 The applicant has stated that they provide drilling of borewell services mainly to agriculturists engaged in raising of agricultural crops. Water is a part and parcel of essential requirements in cultivation and raising of agricultural crops. Likewise, co....

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..... Balance Sheet as on 31.03.2019; v. Invoice No. AD 19-20/10/024 dated 11.10.2019 raised on Aalif Farm, Pudukottai for 'Drilling Hire Charges' with CGST & SGST under the description HSN 995434; vi. Invoice No. AD 19-20/08/020 dated 09.08.2019 raised on High Energy Batteries Ltd., Mathur for 'Drilling Hire Charges' with Output CGST & SGST under the description HSN 995434; 5. The applicant is under the administrative jurisdiction of State authorities. The State Jurisdictional authority vide their letter Rc.No. 520/2020/A4 dated 28.07.2020 has stated that * Drilling of bore- well for supply of water for agricultural operations like cultivation including seeding, planting and ploughing are not covered by Notification 12/2017 CT(Rate) * Drillers and Compressors are taxable under GST. The petitioner has invested to purchase the drillers and compressors from registered dealers and paid SGST and CGST. Hence they have received payments from customers for utilizing the drillers and compressors. Further, the Agricultural operations like cultivation including seeding, planting and ploughing will also be made through canal waters/rivers etc., Hence the petitioner has to pay the tax. T....

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....services under SAC 9986 and no tax is charged. When the drilling is undertaken for Industries (other than agriculture), the invoice is raised as 'Tax Invoice', classifying the service under SAC 995434 and appropriate tax (CGST 8s SGST) is collected. The issue raised before us pertains to the 'drilling and hire service for agriculture', which the applicant classifies under SAC 9986 as 'Support services for agriculture'. The contention of the applicant is that the borewells drilled provides the required quantity of water for cultivation of agricultural crops and the entry Sl.No.54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 covers agricultural operations directly related to raising of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; the borewells drilled provides the required quantity of water for cultivation of agricultural crops.; the supply of compressors which becomes a part of the motor that pumps water is inseparable from the activity of cultivation and therefore is a 'Support service for agriculture'. 8.3 The relevant entry of Sl.No. 54 Notification No 12/2017 is as below: SI.No. Chapter, Section, Heading. Group....

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....s and vines; transplanting and thinning of crops; harvesting; v. provision of agricultural machinery with crew and operators; operation of irrigation systems for agricultural purposes; vi. other services necessary for agricultural production; Crop production services on inputs owned by others like operation of a crop production unit on of e or contract basis This service code does not include: - formation and clearance of agricultural land, cf. 995432 - services provided by agronomists and agricultural economists, cf. 998311 - other pest control services, cf. 998531 - water distribution services through mains (on a fee or contract basis), cf. 998633 From the above, it is evident that 'Provision of agricultural machinery with crew and operators' and 'operation of irrigation systems for agricultural purposes' are listed as 'Support services to crop production'. In the case at hand the applicant does not undertake the 'operation of irrigation system for agricultural purposes' and also 'compressors' are not agricultural machinery. They undertake the activity of drilling of borewells in the agricultural land and let out compressors. The said activity is not classifiable u....