GST
TRT-2025-
AAAR Telangana
Date:-19-10-22
In:-
Issue Favourable to Tax Payer ?:-
Order date – 19 October 2022
Facts –
- The Applicant, M/s 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
Issue –
- Whether the seeds received, processed, packed and returned by the Applicant, as job worker, as seeds for sowing are ‘agricultural produce’ in terms of the definition under the Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 and 11/2017- Central Tax (Rate) dated 28-06-2017?
Order –
- The AAAR observed that it becomes imperative to analyse the definition of ‘agriculture produce’. The primary factory which needs to be understood is that to get into the bracket of agriculture produce for claiming exemption, the main condition is that either no processing is done on the produce or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market.
- The 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.
- Had the activities of the applicant are only cleaning, drying, grading without involving any chemical processing on the subject produce, then the services would be on agriculture produce and exemption would be available. However, since in this case it is not proved beyond doubt by the applicant that their activities get exempted under the said two notifications, hence not inclined to accept the plea of the applicant.
- The order passed by the lower authority is upheld. The subject appeal is disposed accordingly.
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