Sugarcane Juice Attracts 12% GST: AAR [Read Order]

Sugarcane Juice - Sugarcane Juice Attracts - GST - AAR - Authority for Advance Ruling - taxscan

The Uttar Pradesh Authority for Advance Ruling (AAR) consisting of members Harilal Prajapati and Rajendra Kumar ruled that sugarcane juice attracts 12% Goods and Services Tax (GST).

Further stated that the Sugarcane is neither fruit nor vegetable nor nuts but it is covered under other parts of plants.

The applicant M/s Gobind Sugar Mills Ltd, manufacturer of Sugar, Molasses and Ethanol submitted the application for advance ruling seeking classification of sugarcane juice and the rate of GST.

The applicant submitted that they would sell sugarcane juice to distilleries where they produced ethanol falling under Chapter heading 2207 attract GST at 5% without performing any additional processing. Sole raw material for manufacturing of Sugar is sugarcane, coming under Chapter Heading 1212 and attracting Nil rate of GST, and also classed under farm produce.

As per the observations of the panel, the agricultural produce as per the definition given in above mentioned notification should necessarily contain three essential elements:

  1. It must be produced out of cultivation of plants and rearing of all life forms of animals.
  2. On which no further processing is done or such processing is done as usually done by cultivator or producer which does not alter its essential characteristics i.e. product broadly retains its physical and chemical form/Constitution.
  3. Most importantly the processing done should be in such a manner which is usually done by a cultivator & producer which should only help it to attain marketability at primary market. i.e. definition limits the scope of processing and allows only those activities which help producers to attain the condition of its first marketability in primary market.

It was noted by the authority that in the present case sugarcane juice is produced by way of crushing of sugarcane and hence not produced by farmers. Also the process changes its form and constitution along with changes are of such nature that if it is to attain the secondary market for use and become raw material for production of sugar, molasses etc.

Since all the three Conditions of agricultural produce are not fulfilled by sugarcane juice and hence it is not considered to be agricultural produce.

The authority observed that as per chapter heading 2009, it includes “fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter”.  Since sugarcane is not a fruit or vegetable. Hence it shall fall into tariff item 20098990,  “others”.

Further stated that although, there is no specific entry for the product ‘Sugarcane Juice in Notification NO. 1/2017-Central Tax (Rate) dated 28.06.2017, there is an entry most akin to the product and process (at sr. No. 41 of Schedule 2  of Notification No.1/2017 CENTRAL TAX (Rate) Dated 28-6-2017 and attracts 6% CGST and 6% SGST or 12% IGST under tariff item 20098990.

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