The Punjab Authority For Advance Ruling Goods And Service Tax, has recently clarified that cotton seed (Banaula) is not eligible for exemption from the payment of GST on GTA services.
The aforesaid observation was made by the Authority when an application was preferred before it by an applicant named M/S Ahuja Industries, who is engaged in the business of receiving cotton seeds (Banaula) after being transported by the Goods Transport Agencies (GTA) which is classifiable with chapter heading 9965/ 9967 of the GST Tariff Act, 2017.
The question seeking the Advance Ruling being as to whether cotton seeds ( Banaula) are included in the list of agricultural produce for exemption in GTA service under notification no 12/ 2017, dated 28th June 2017 ( Tariff heading 9965/9967) and if not the tax rate applicable for the same, it was submitted by the applicant that the GST services in r/o agricultural produce is exempt under the GST Act vide the notification no 12/ 2017, dated 28th June 2017 ( Tariff heading 9965/9967), and further that as per the definition in para 2 (d) of the aforesaid notification 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 does not alter its essential characteristics but makes it marketable for primary markets.
However, hearing the opposing contentions of both the sides, perusing the materials available on record and making its observation, the Authority said:
“The Hon’ble Supreme Court Of India in the case of KrishiUpajMandiSamiti New Mandi Yard Alwar V. Commissioner Of Central Excise and Service Tax, Alwar, has held that exception notification should not be liberally construed and that beneficiary must fall within the ambit of the exception and fulfil the conditions thereof and further that in cases where such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication.”
“Hence, we find that the judgments of the Hon’ble Apex Court are squarely applicable in the instant case and that the applicant is not eligible to avail exception in the payment of GST on GTA services”, it added.
Thus, finally passing its order, the Authority ruled:
“Cotton seed (Banaula) is not eligible for exception from the payment of GST on GTA services as per Notification No 12/ 2017-) Central Tax (Rate) dated 28th June 2017 (Tariff heading 9965/9967).
The GST chargeable is 5% (2.5 % CGST and 2.5 % SGST) on GTA services availed by the applicant for transporting cotton seeds (Banaula), provided that credit of input tax charged on goods and services used in supplying the service has not been taken, else at 6%, under Sr. No. 9 of the Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017.”
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