The Tamil Nadu Authority of Advance Ruling (AAR) ruled that the testing of chemicals in fresh table grapes not exempted under agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing.
The applicant, SGS India Private Limited is primarily engaged in the business of providing various support services including sampling, inspection, verification, testing and certification services, which is referred to as ‘inspection and testing service on fresh table grapes and other agricultural produce.
The applicant has sought the advance ruling on the issue whether the supply of “inspection and testing services” on fresh table grapes is classifiable under entry 9986 of Notification no.11 /20I7-Central Tax Rate) dated June 28 20I7, support services to agriculture, forestry, fishing, animal husbandry chargeable to NIL rate of tax and Entry Entry 5(a) of exemption notification no.12/2017-Central Tax (rate) dated June 28,20I7.
The two-member bench of Manasa Gangotri Kata and Kulinjee Selvaan clarified that that supply of services classifiable under SAC 9986 and which are agricultural operations directly related to production of any agricultural produce are eligible for this exemption.
The AAR observed that the activities of testing for chemical residue, grading based on physical attributes of table grapes are not classifiable under SAC 9986 as they are not meant for preparation of crops for primary market and not necessary for production of the grapes.
Therefore, the AAR ruled that they are not directly related to the production of the table grapes. Accordingly, the activities of the applicant are not eligible for the exemption under therefore the applicant is not eligible for exemption at Entry No. 54(a) of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 as amended and Notification dated 28.06.2017.
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