Activities of Milling of Wheat into Wheat flour, along with Fortification and Supply is Composite Supply: AAR [Read Order]

The West Bengal Authority for Advance Ruling (AAR), observed that the activities of milling of wheat into wheat flour, along with fortification and supply is composite supply.

The Applicant, Murshidabad Flour Mill Private Limited, is a flour miller, engaged in providing services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System (PDS). The ownership of wheat or atta is never transferred to the Applicant.

The applicant contended that the component of goods in the said composite supply is packing material and vitamins. The value of supply of such packing material and vitamins are Rs. 50/- and Rs.10/- per quintal respectively. Such value of the packing material and vitamins are calculated as per the cost sheet provided by the State Government and not as per actuals. Owing to the continuous nature of the contract, the actual value of the packing material and vitamins are not determinable at the time when GST is levied.

The applicant does not gain ownership of either wheat or atta in the entire process of crushing it. This is substantiated by Clause 10(4) of the contract which states that the applicant shall under no circumstances sell the stock of atta in the open market. The atta is distributed only through PDS.

A Two-Member Bench of the Authority comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “The agreement further requires the applicant to pack the crushed stock of wholemeal atta after fortification into properly labelled poly-packs having thickness of 50 microns or above.”

“It, therefore, appears that the activities undertaken by them 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” the Authority concluded.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates