TaxTMI 
TaxTMI 
2023 (7) TMI 185
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....ing 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 1.2 The applicant is stated to be engaged in the business of selling flour (atta) and providing service of job work in the nature of crushing food grains supplied and owned by Food & Supplies Department, Government of West Bengal. 1.3 The applicant submits that he has entered into an agreement with the District Controller of Food and Supplies, Kolkata, 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 fl....
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....e of power conferred by section 3 of the Essential Commodities Act 1955 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. 2.2 The West Bengal Urban Public Distribution System (Maintenance and Control) Order, 2013 has been issued in exercise of the power conferred by Section 3 of the Essential Commodities Act 1955 read with the Ministry of Consumer Affairs, Food and Public Distribution Department Order No. G.S.R. 630(E) dated 31.08.2001. It extends to the urban area of West Bengal. 2.3 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 class 33 and 34 of West Bengal Urban Public Distribution System and is in control 2013. Agreement herein means agreement made between the state government and owners of flour mills thereof in accordance with the provision of the said Guidelines, 2017, as define....
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.... (PDS) by the State Govt. (Foods & Supplies Department). (d) By crushing 100 kgs of wheat, 95 kgs of flour and by-product in the form of 4 Kgs of Bran and 1 kg of refractor is generated. (e) The cash consideration paid for the senders of crushing is Rs. 136.48/-. (f) Further, the applicant also gets non cash consideration in the form of being allowed to retain 4 Kgs of Bran and 1 kg of refractor which is sold in the open market realizing Rs. 81. Further Rs. 43/- is realized by selling gunny bags which is used by the State Government for sending gunny bags to the applicant. (g) Therefore, total non-cash consideration is Rs. 124/-. (h) Details of cash and non-cash consideration is as below: - Flour Millers to be paid for crushing of 100 kg of Wheat Cost for of 95 Kg Atta (in Rs.) A Crushing Charges 90.78 B Fortification, Costs 10 C Packing Charges 50 D Transportation & Handling Charges 28.7 E Consideration from sale of Bran (4" Rs.20/Kg (Non-Cash) 80 F Consideration from sale of Refractors (1" Rs.1/kg) (Non-Cash) 1 G Total (A+ B+C+D+E+F) 260.48 H Less: Non-Cash Cons....
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....a bundled supply of the services of crushing of the grains along with supply of packing materials. They are supplied in conjunction with each other in the ordinary course of business as food grain cannot be transported without proper packing. It is, therefore, a composite supply of goods and services where service of crushing food grains is the principal supply and providing packing materials is ancillary to it. 2.10 The primary condition to be covered under the said entry of exempt supply reads as - "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 ...". Accordingly, it is submitted by the applicant that in the instant composite supply, • Value of Supply of Goods = Fortification Charges + Packing Charges = Rs. (10 + 50) = Rs. 60 • Value of Composite Supply = Rs. 260.48 Therefore, value of supply of goods vis-à-vis value of composite supply is 23.03% which is much lesser than 25% as specified in the sl. no. 3A of the notification No. 12/2017- CT (R) dated 28.06.2017. 2.11 Distribution through PDS is covered under Entry No. 28 of t....
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....such flour under Public Distribution System is eligible for exemption under entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Alternatively, even if it is assumed without accepting that the aforesaid exemption is not available to the applicants, the services by way of job work in relation to all food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) is taxable at the rate of as 5% (CGST + SGST) vide Notification No. 11/2017- Central Tax (Rate). 3. Submission of the Revenue The officer concerned from the revenue has expressed the following views in this regard. 3.1 The CBIC vide Circular No. 153/09/2021-GST has clarified that supply of service by way of milling of wheat into flour or of paddy into rice, is not eligible for exemption under Sl. No. 3A 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%. The activity mentioned by the applicant in the application covered in the above circular. Accordingly, the applicant appears to be not eligible for the exemption under above notification. 3....
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.... been selected for empanelment for crushing of wheat into wholemeal atta and fortify it by premixing of micro-nutrients containing Iron, Folic acid and Vitamin to a specific percentage. The agreement further requires the applicant to pack the crushed stock of wholemeal atta after fortification into properly labeled poly-packs having thickness of 40 microns or above. It, therefore, appears that the activities undertaken by the applicant for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of 'composite supply' under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. 4.5 Now we take the issue to decide whether this composite supply is made 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. 4.6 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 gu....
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....48, thereby the value of goods involved in the instant composite supply stands at 23.03% of the total value of supply i.e., it does not exceed 25% of the value of the composite supply. 4.10 A composite supply shall qualify for exemption under entry serial no. 3A of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 upon fulfillment of following criteria: i) The supply has to be provided to Government/Local Authority/Governmental authority/Government Entity; ii) The supply has to 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. 4.11 In Para 3.2 of the Circular No. 153/09/2021-GST dated 17.06.2021 [CBIC-190354/36/2021-TRU Section - CBEC], it has been clarified that "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. 3A of Notification No. 12/2017- Central Tax (Rate....