Telangana Appellate Authority for Advance Ruling (AAAR) recently upheld the decision Of Authority of Advance Ruling held that No GST exemption available to Grains does not qualify to be seed.
The appellant Narsimha Reddy & Sons are primarily engaged in production and processing of agricultural seeds. In the process of production, the applicant outsources certain services such as cleaning, drying, grading and packing to the job workers and stores the seed in various facilities after processing them. In the process they also transport the seeds by engaging a GTA. The appeal is filed against the Order passed by the Telangana State Authority for Advance Ruling.
Appellant sought the advance ruling to clarify whether production and processing of agricultural seeds exempted from GST or not.
After considering the applications of the applicant the Advance Rule Authority Telangana held that seed and grain are not one and the same All grains do not qualify to be seed. The law applicable to grain and seed will be different and therefore concessions applicable to grain produced by a cultivator would not be applicable to seed.
After filing an appeal before AAAR, the applicant contended that their activities fall under the definition of ‘agriculture produce’, and hence, they are eligible for exemption under above two notifications. As against this contention, the lower authority held that the activities are outside the purview of definition of ‘agriculture produce’ and hence, no exemption is available to the applicant”
Further applicant submit that applicant takes organizing the production of agricultural seeds, storing the agricultural seeds, drying of maize cobs, it segregates part of the agriculture produce based on its quality and germination strength and undertakes preservation process such as clearing, drying, grading and chemical processing to make the seed fit for sowing purpose and to have better shelf life.
After the contentions made by the applicant the Appellate Authority consists of member Neethu Prasad , and B. V. Sivanaga Kumari, observed that the whole gamut of dispute is around exemption contained in the two notifications. Both the notifications have defined “agriculture produce” as any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fiber, fuel, raw material or other similar products, on which either no further processing has done or such processing is done as is usually done by a cultivator or producer which did not alter its essential characteristics but makes it marketable for primary market.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
