AI Drafter 
TaxTMI 
TaxTMI 
2021 (8) TMI 524
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.... and APGST Act respectively) by M/s. Seetharamanjaneya Dal and fried Gram Dali, Guntur (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: The Applicant is engaged in the business of pulses and dalls with a facility in its mill to convert pulses into dalls. The Andhra Pradesh state civil supplies corporation, limited, Vijayawada, which is a State Government undertaking engaged in the business of supplying essential commodities to the Fair price shops for public distribution, has given a work order dated 13.05.2019 to the applicant. The applicant is appointed as miller cum transporter for conversion and supply of resultant red gram dall to allotted districts of Zone-TI (Vizianagaram & East Godavari) and is ordered to lift a quantity of 3823.529 MTs of indigenous variety of red gram whole from the allotted godowns of NAFED and to supply 2600 MTs of resultant red gram dall in 1 kg packet form to the allotted districts. Further the miller is ordered to supply the resultant red gam dall in 1kg packet form to the MLs points of allotted districts after conversion @68% of outturn ratio and the incidental charges ....
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....ubmits that in these transactions, the components of 'service' (custom milling) are wholly absent and on the other hand, it is demonstrated that it is a transaction of exchange of goods falling under the category of 'barter'. When once it is considered as a transaction of barter of goods, it falls outside the scope of 'service' i.e., no custom milling of red gram whole. Applicant further submits that as per Para 1 (a) in Schedule II to the Central Act, 'any transfer of the title in goods is a supply of goods.' As applicant has transferred red gram dall in advance even before receipt of whole red gram from the Corporation, there was transfer of title in red gram dall in favour of the corporation and accordingly there was supply of goods. Without prejudice to the above, applicant submits that Notification No. 12/2017-CTR dated 28 06.2017 enumerates services which have NIL rate of GST. In that Notification, Entry No.55 reads as follows:- Heading 9986 Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, ra....
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....he Corporation. Transportation of red gram dall to MLS points: This is ancillary and incidental to the supply of red gram dall, which is generally exempt. Applicant has not provided any transport service. Hence tax need not be paid by the applicant on such expenditure incurred. It is further submitted that applicant has to supply red gram dall in primary and secondary packing material. There is no separate contract for supply of packing material. Such packing is incidental and ancillary to the main supply of red gram dall, which is generally exempt from tax. Packing materials go along with red gram dall. No tax is leviable on the value of packing material for the above reasons. For example fresh milk is exempt in terms of entry at SI. No.25 of Notification No.2/2017-CTR dated 28.06.2017, Such fresh milk is daily supplied in plastic sachets to crores of people in the country. Even curd is supplied in paper cups. But never tax has been levied on such packing materials under the GST law for the simple reason that goods packed are exempt. Same analogy holds good in this case also and hence no tax is leviable on the value of primary and secondary packing material. In view of th....
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....d districts". As can be seen from above, it is clear that the applicant is appointed as "miller cum transporter", for the purpose of conversion of red gram whole to red gram dall @68% of outturn ratio. Hence, the argument of the applicant treating the activity under taken in the instant case, as 'barter system' is misconstrued. It is nothing but 'job work' carried out on the whole red gram supplied to the applicant. Now, we examine whether the activity of milling of whole red gram to red gram dall by the millers is liable to GST or not. The clarification issued in this regard on the custom milling of paddy is applicable as well in the instant case. F.No.354/263/2017-TRU by the Government of India, Ministry of Finance, in its letter dated 20.11.2017 clarifies as follows; "3. Milling of paddy is not an intermediate production process in relation to cultivation of plants. It is a process carried out after the process of cultivation is over and paddy has been harvested. Further, processing of paddy into rice is not usually carried out by cultivators but by rice millers. Milling of paddy into rice also changes its essential characteristics. Therefore, milling....