The West Bengal Authority for Advance Ruling (AAR) has submitted that the milling of wheat into flour to the government of West Bengal for public distribution system would be eligible for Goods and Service Tax (GST) exemption.
The applicant Jai Loke Nath Flour Mills Private Limited is a flour miller. The applicant submits that he has entered into an agreement with the State of West Bengal represented by the District Controller of Food & Supplies for conversion of wheat provided by the State Government and owned by the State Government, at all times, into atta/ fortified atta, for distribution by the State Government through Public Distribution System.
Manish Raj Dhandharia, on behalf of the applicant, contended that the process of fortification does not amount to supply of goods by the applicant rather it is a process carried out by the applicant for provision of its services. According to the applicant, nutrients added in the atta as fortification process cannot be considered as a separate/ distinct supply of goods in addition to the service of milling of wheat into flour as it is an integral part of the process of such conversion.
The Authority for Advance Ruling (AAR) of Brajesh Kumar Singh, (CGST Member) and Joyjit Banik, (SGST Member) held that,
“In the instant case, value of supply shall be the consideration in money as well as non-cash consideration, as discussed. This composite supply of services by way of milling of wheat into flour (atta) to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the value of goods involved in such composite supply does not exceed 25% of the value of supply.”
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