TaxTMI 
TaxTMI 
2022 (10) TMI 776
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....omments that is placed on file. Jurisdictional Authority also submitted written comments on the issue which are placed on file. Applicant had deposited only 5,000 for IGST while filling Advance ruling application. In this regard, a notice dated 02.03.2022 was issued to the applicant to deposit the requisite fee of Rs. 10,000 (5,000 each for SGST and CGST) as prescribed under the Act. Proof of fee deposited by the applicant on 21.03.2022 is place on file. Another hearing was scheduled on 16.08.2022. On the scheduled date none present from applicant side. Reply through email dated 16.08.2022 received vide which applicant has submitted that he may not be able to attend the meeting on grounds of foreign travel. So, he requested to kindly grant an adjournment of the hearing scheduled on 16th August, 2022 to any date convenient to Authority. Vide email notice dated 18.08.2022, the applicant has been given last opportunity to appear in person or through video conferencing to present his case before the Advance Ruling Authority on 26.08.2022 but none appeared. 3. QUESTION(S) ON WHICH ADVANCE RULING IS SOUGHT: 1. Are Cotton Seeds "Banaula" included in the list of agricultural produce for....
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.... 28'hJune, 2017 'Agricultural produce' means any produce out of 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, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary markets." (d) That as per definition in para 2 (e) of the above Notification, `Agricultural Produce Marketing Committee or Board' constituted under a state law for the time being in force for the purpose of regulating the marketing of agriculture produce. (e) That as per Section 2 (a) of The Punjab Agricultural Produce Markets Act, 1961 in its Schedule at Sr. No. 15 incorporates Cotton Seed "Banaula" is an agricultural produce. (f) That they cited the judgment of Hon'ble CESTAT Delhi in the case of R. K & Sons Vs. CCE Rohtak-2016 (42) STR 314 (Tri.Del) where in it was held that 'ginned cotton' is covered by the definition of 'agricultural produce'. (g) That they sought information from 42 different authorities under R....
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....Rates) dt. 28.06.2017 provides the exemption for transportation of agriculture produce by GTA. So, traders are considering oil seeds as agriculture produce and not paying tax on the freight element under RCM i.e on trading of the oil seeds. However, the department disagrees with the above interpretation of the traders and opines that the taxpayers are required to pay tax on the freight element on the purchase of cotton seeds. Further analysis of the issue reveals that the term agriculture produce is defined in the above said notification as, "Agriculture produce means any produce out of cultivation of plants and rearing of all life form of animals, except rearing of horses, for food fiber, fuel, raw material or other similar products, on which either no processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes its marketable for primary market". This definition of agriculture produce under GST law is very restrictive in nature. It provides exemption only to those producers which arc directly harvested from, the farms or on which such processing is done by the cultivator to make it marke....
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....mption in GTA service under Notification No.12/2017 dated 28th June, 2017 (Tariff heading 9965/9967)? If not, what is the tax rate applicable on M/s Ahuja Industries for GTA services in respect of Cotton seeds? 6. Before proceeding further, it is pertinent to discuss the term Cotton Seed and how it is extracted. Cotton seed is obtained from raw cotton, which is produced by cultivation of cotton plants. Raw cotton is plucked from the plant usually by hand or plucker machine and sold for primary market as such without further processing by the cultivator or the producer. The case of cotton seed is such that it is obtained from raw cotton by way of industrial process called ginning. The process involves separating lint from the seed using machines. Cotton seed so produced is then transported by the persons supplying services of GTA to the factories for extracting cotton seed oil. 7. The terms 'agricultural produce' is defined under the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. It is also defined under the Punjab Agriculture Produce Markets Act, 1961 (the PAPM Act). (a) Under the PAPM Act, the market committee has been empowered to levy market fees on pu....
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....cesses using machinery. It is this further processing of the produce that brings the cotton seed out of the definition of 'agricultural produce' under GST. 10. In light of the aforesaid legal provisions, one of the essential conditions to qualify as agriculture produce is that the produce does not require any further processing or processing is carried by producer/cultivator. In present case, it may be seen that the cotton seed emerges after processing in mills, thus the above condition is not fulfilled and the same cannot be said to be agriculture produce as per the Notification. 11. Further, it is held in the plethora of judgments that exemption Notification should be strictly construed and beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. Reliance is placed on the following judgments: - 12. Hon'ble Supreme Court of India in the case of Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar Versus Commissioner of Central Excise and Service Tax, Alwar cited as 2022 Live law (SC)203. Relevant paras of the jud....
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....rcelor Mittal Nippon Steel India Limited in para 24 of the order has held that; "24. It is held that the respondent -Essar Steel Ltd. - the eligible unit was not entitled to the exemption from payment of purchase tax under the original Entry No.255(2) dated 05.03.1992, firstly, on the ground that it did not fulfill the eligibility criteria/ conditions mentioned in the original Entry No.255(2) dated 05.03.1992 and secondly that there was a breach of declaration in Form No.26 furnished by the respondent -eligible unit - Essar Steel Ltd." We found that the judgments of Hon'ble Apex Court are squarely applicable in the instant case and applicant is not eligible to avail exemption in payment of GST on GTA services. 13. Therefore, cotton seed emerging from the intermediate process do not fall in the definition of 'agricultural produce' under GST. It is apparent from the definition of 'agricultural produce' that the government intends to provide exemption to the produce occurring only at the first stage of the cultivation or rearing and not to those which are processed in factories after they are sold by the cultivator/producer. (B) Rate of GST: - The services pr....