AI Drafter 
TaxTMI 
TaxTMI 
2022 (9) TMI 368
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....ng Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant has entered into an agreement with the District Controller of Food and Supplies, Government of West Bengal for supply of fortified wholemeal atta. According to the said agreement, the State Govt. (Food & Supplies Department) sends the whole, unpolished food grain to the applicant for crushing and processing it into flour. The applicant returns the flour(atta) packed in the manner as the State Govt. requires by fortifying the crushed grain with the vitamin which is then distributed through the Public Distribution Sy....
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....greement, the output generated from the process of milling is 95% per quintal of wheat. The balance of 4% is for de-branning and 1% in the form of refraction for cleaning. These bran and refractors generated are retained by the applicant for sale in the open market. In addition to this, the applicant retains the gunny bags into which food grains are supplied to him by the Government. These gunny bags are also available for sale in the market. 2.4 The applicant contends that the instant supply is covered under serial no. 3A of Notification no. 12/2017-Central Tax (Rate) dated 28th June 2017, as amended from time to time, and therefore is exempted from payment of tax. Description of services as specified in serial number 3A reads as follows: "Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity 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 ....
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.... essential commodity is controlled as per the provision of section 3 of the said Act 1955. • The West Bengal Public Distribution System (Maintenance and Control) Order, 2013 has been issued in exercise of power conferred by section 3 of The Essential Commodities Act1955 and the same extends to the whole of West Bengal except the area where the West Bengal Urban Public Distribution System(Maintenance and Control) Order, 2013 is in force with Government of India Ministry of Consumer Affairs. • The West Bengal Public Distribution System (Empanelment of Flour Mill and Milling of Fortified Atta/Wholemeal Atta) guidelines 2017 has been framed in pursuance of clause 36 and 37 of the West Bengal Public Distribution system (Maintenance and Control) Order 2013 and clause 33 and 34 of West Bengal Urban Public Distribution System (Maintenance and Control) Order 2013. • The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to....
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..... f. Also, there are 2 gunny bags which are retained by the applicant for 100 kg of wheat sent. The sale value of each gunny bag in the market is Rs. 22. The Government deducts Rs. 43 as cost of two gunny bags which are retained by the applicant. g. Therefore, total non-cash consideration is Rs. 142.24/-. h. Details of cash and non-cash consideration are provided below: Sl No. Flour Millers to be paid for crushing of 100 kg of Wheat Cost for 95 kg atta 1 Crushing Charges 90.78 2 Fortification Charges 10 3 Packing Charges 50 4 Transportation & Handling charges 28.70 5 Consideration from sale of Bran 97 6 Consideration from sale of Refractor 2.24 7 Total consideration 278.72 Less: Non-cash consideration 8 Cost of 2 gunny bags -43 9 Receipt from sale of Bran and Refractor -99.24 10 Net Cash Consideration 136.48 • In the given case, the value of supply of goods are as follows: a. Fortification charges - Rs. 10 b. Packing Charges - Rs. 50 • The cost of purchase of Fortification material is Rs. 140....
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....ood products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);" 2.10 The definition of job work as per Section 2(68) of the CGST Act 2017 has been provided as follows: "job work" means any treatment or process undertaken by a person on goods belonging to another registered person and the expression "job worker" shall be construed accordingly. 2.11 The above definition of job work requires that the principal should be a registered person. In the given case, the principal is the State Government. The State Government is registered for TDS under Section 51 of the CGST Act 2017. Whether they would be within registered person for the purpose of job work has been clarified in Para 3.2 of the Circular no. 153/09/2021-GST dated 17th June 2021: "In case the supply of service by way of milling of wheat into flour or of paddy into rice, is not eligible for exemption under Sl. No. 3 A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 for the reason that value of goods supply in such a composite supply exceeds 25%, then the applicable GST rate would be 5% if such composite supply is provided to a registered pe....
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.... Rs. 142.24/-(Rs. 97+2.24+43) is the consideration other than cash. The packing plus fortification charges received in this transaction are Rs. 60 i.e 21.53% of the total value of supply. So, in the instant case, as per Circular no. 153/09/2021- GST dated 17.06.2021 & Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017, the composite supply of services by way of milling of food grains into flour to Food & Supplies Department, Govt. Of West Bengal for distribution of such flour under PDS is eligible for exemption as the value of supply of goods does not constitute more than 25% of the value of the said composite supply. 3.4 Para No. 3.2 of the Circular No 153/09/2021- GST dated 17.06.2021 implies that "in case the supply of service by way of milling of wheat into flour is not eligible for exemption under SI No 3A of Notification 12/2017 Central Tax (Rate) dated 28.06.2017 for the reason that the value of goods supply in such a composite supply exceeds 25%, then the applicable GST rate would be 5%. 4. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorised representatives of the applica....
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....No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance & Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance & Control) Order, 2013. In this context, we refer to Para 3.1 of the Circular No. 153/09/2021-GST dated 17.06.2021 where it is stated that 'Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which lists the activities that may be entrusted to a Panchayat under Article 243G of the Constitution.' Hence, the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. 4.7 The issue now left with us is to ascertain whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not. According to the applicant, the value of supply of services in respect of milling of 100 kilograms wheat should be Rs.278.72 though the ....
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....iew that in the instant case, value of supply shall be the consideration in money and shall also include all the components towards non-cash consideration, as discussed. We also like to reproduce here relevant portion of the memo no. 569(3)-FS/Sectt./Food/4P-02/2016/2021 dated 18th February 2022 issued by the Department of Food & Supplies, Government of West Bengal: "The State Government is providing 100 Kgs of Wheat to the empanelled Flour mills and it is taking back 95 Kgs of fortified Atta. 5 Kgs of by-products generated are bifurcated into Bran and Refractor in the Ratio 4:1 vide Notification No. 2834-FS dated 06.09.2017. This is also mentioned in the bi-partite agreement between the DCF&S/DR and the flour millers. These bi-products are valued as per market price @ Rs.20/kg of Bran and Re 1/kg of Refractor. So, consideration from sale of 4kg Bran and 1kg refractor comes to Rs.81 only. 100 Kg wheat is supplied to flour millers in 2 gunny bags. The flour millers retained those 2 gunny bags, which are valued at Rs.43 only. Thus the total non-cash consideration for bi-products and gunny bags allowed to flower millers is Rs.124 only for each 100 kg wheat." 4.14 For the p....