The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) ruled that the Drilling of Borewells for the Supply of Water in Agriculture Land is not a ‘Support Service for Agriculture’.
The Appellant, Tvl. Vallalar Borewells has stated that they are engaged in the activity of drilling borewell service to agriculturists. Water is a prime source for the agriculture of crops. Likewise, compressors which are let out by them to agriculturists enable the motor to function and discharge water as required for cultivation and allied agricultural uses. They also obtain a confirmation letter from the agriculturist that the borewell drilled in their land is used only for agricultural purposes.
The appellant sought the advance ruling on the issue of whether the supply of service provided by the appellant is in relation to agricultural operations directly in connection with raising of agricultural produce Drilling of Borewells for the supply of water for agricultural operations like cultivation including seeding, planting and ploughing, and Letting out compressors for pumping of water from the borewells to the agricultural fields.
The AAR ruled that a compressor is not agricultural machinery and is a General-Purpose Machinery. Also, the only provision of agricultural machinery with crew and operators is stated as ‘Support service for agriculture. Therefore, letting out of the same is also not a ‘Support service for agriculture’ classifiable under SAC 9986 and the applicant is not eligible for exemption.
The main argument of the appellant regarding the activity undertaken is by way of agricultural operations relating to the production of any agricultural produce, etc., prima facie, in the scheme of things of GST, no two classifications can be adopted for a single activity based on end-use or where it is rendered, etc. The appellant himself has already classified his supply of services of borewell drilling under 9954 for the purpose of paying the tax; it defies logic as well as the law that the same activity if done on agricultural land will be classifiable under a different heading 9986.
The two members consisting of M.A. Siddique and G.V. Krishna Rao said “we do not find any reason to interfere with the order of the Advance Ruling Authority in this matter.”
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