Production and supply of fertilizers Urea and Ammonia shall not attract GST TDS, when recipient fall u/s 51(1) (a), (b), (c), (d) of CGST Act: AAR [Read Order]

The Telangana Authority for Advance Ruling ( TAAR ) has held that production and supply of fertilizers urea and ammonia should not attracts  Goods and Service Tax ( GST ) Tax Deduction at Source ( TDS ) when the recipient falling under section 51(1) (a), (b), (c), (d)  of Central Goods and Service Tax Act, 2017.

The applicant Ramagundam Fertilizers and Chemicals Limited a public company to set up natural gas-based ammonia urea complex along with offsite & utility facilities at Ramagundam. RFCL was incorporated to set up a natural gas-based ammonia urea complex along with offsite & utility facilities at Ramagundam, Telangana with design capacity of 2,200 MTPD Ammonia Unit and 3,850 MTPD Urea Plant.

RFCL is primarily engaged in production and supply of fertilizers Urea and Ammonia. The MRP of urea is statutorily fixed by the Government of India and the difference between the delivered cost of fertilizers at farm gate and MRP payable by the farmer is given as subsidy to the fertilizer manufacturer/importer by the Government of India. Currently, RFCL is supplying urea to NFL and NFL shall supply the same to the farmers.

The applicant has sought an advance ruling in respect of Applicability of GST TDS upon the production and supply of fertilizers urea and ammonia.

Jaya Ram Yarram, Associate Director, Sri. Vivek Manyam, Assistant Manager & Sri Rama Krishna V, Senior Manager on behalf of the applicant submitted that As per Section 51 of Central Goods and Services Tax Act the persons notified are required to pay GST TDS by deducting the same from its suppliers.

The two member bench of Authority of Advance Ruling comprising S.V. Kasi Visweswara Rao (Additional Commissioner commercial Taxes) and Sahil Inamdar, I.R.S(Additional Commissioner Custom & Indirect Taxes) observed that The Applicant is established by the Government under the ministry of fertilizer as a PSU. ii. Cumulative shareholdings in the company i.e., 87.3% belong to Central PSUs & the State Government of Telangana. Thus the applicant falls under section 51 (1) (d) of the CGST Act.

Hence By virtue of the above status any supplies made to persons falling under clauses (a), (b), (c) & (d) of the sub-section (1) of section 51 will not attract TDS at the hands of the recipients of such supplies by virtue of Notification No.73/2018 dt: 31-12-2018.

To Read the full text of the Order CLICK HERE

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