TaxTMI 
TaxTMI 
2022 (9) TMI 202
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.... providing services of job work by crushing food grains supplied by the Food & Supplies Department, Government of West Bengal. The Food & Supplies Department supplies wheat to the appellant who crushes the grain to obtain the final product 'atta' (flour) which is fortified with micronutrients and then packed in labeled poly-packs as per specifications stipulated in the work order. The micronutrients and packing materials are supplied by the appellant. The packed fortified wheat flour is then supplied to the Food & Supplies Department to be sold / distributed subsequently under the Public Distribution Scheme (hereinafter referred to as PDS). 4. The appellant receives both cash and non-cash consideration for the job work done for the Food & Supplies Department. The wheat supplied to the appellant comes in gunny bags which are allowed to be retained by the appellant. Apart from the final product 'atta', two by-products namely Bran and Refractor are obtained on crushing of wheat and the said by-products are allowed to be retained by the appellant. By crushing of each 100 kg of wheat, the products obtained are 95 kg flour, 4 kg bran and 1 kg refractor. The non-cash considerations are....
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.... is a composite supply. It further observed that to qualify for exemption under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (corresponding State Notification No. 1136 FT dated 28.06.2017), any composite supply needs to fulfil the following criteria: (i) The supply must be provided to Government/Local Authority/ Governmental Authority/ Government Entity; (ii) The supply must be by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution; (iii) The value of supply of goods in the said composite supply shall not exceed 25% of the value of the said composite supply. The WBAAR observed that the instant composite supply undisputedly fulfils criteria (i) and (ii) above. So the moot question is to decide whether the value of goods supplied in the said composite supply is not more than 25% of value of total supply. The goods supplied to the Food & Supplies Department in the composite supply are micronutrients like iron, folic acid, vitamins etc. and for this Rs.10/- is received ....
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....pply value is Rs.260.48. (ii) Supply of gunny bags and by-product in the form of Bran and Refractor by Food & Supplies Department, Government of West Bengal to the petitioner at a price of Rs. 124/- fixed by the latter. (iii) Supply of gunny bags, Bran and Refractor by the petitioner to third parties where the petitioner is charging and paying tax at the stipulated rate on the consideration received on such supply in the open market. d) The Appellant submits that the cash and non-cash consideration have been stipulated by the Food & Supplies Department, Government of West Bengal vide Memo No. 2979(3)- FS/Sect./Food/4P-02/2016 dated 08.12.2020 where cash consideration has been fixed at Rs.136.48 and non-cash consideration at Rs.124/- So total consideration for crushing 100 kg wheat comes to Rs.260.48 which has been agreed upon by the Appellant and the Food & Supplies Department, Government of West Bengal. The consideration that the Appellant and the third parties will agree upon at the time of sale of gunny bags, bran and refractor in the open market cannot be the deciding factor in the price agreed upon by the Appellant and Food & Supplies Department for ....
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.... FT dated 28.06.2017). 12. The matter is examined and written and oral submissions made before us are considered. It has already been accepted by the WBAAR in its ruling in Order No. 18/WBAAR/2021-22 dated 31.12.2021 that the total value of composite supply will comprise both cash and non-cash considerations. The WBAAR did not consider the valuation of Rs.124/- per 100 kg wheat being supply consideration of gunny bags, refractor and bran. It erred in its opinion that the non-cash consideration will be the actual sum received from open market on supply of gunny bags, refractor and bran. The WBAAR failed to appreciate that the valuation of the composite supply is the agreed upon price between the flour millers and the Food & Supplies Department. This agreed upon price includes the notional value of Rs.124/- of two gunny bags and 5 kg by-products (1 kg refractor and 5 kg bran) which are retained by the miller, irrespective of actual disposal price of those gunny bags and by-products in future. The supply value of milling of wheat in the instant case cannot be dependent on actual receipts by the miller in future from third parties in disposal of the retained goods. It is clear from ....