Date of Order: 20-09-2019

Key Pointers:

• The applicant, M/s Ahuja Industries, is engaged in the business of receiving Cotton Seeds "Banaula" after being transported by Goods Transport Agencies (GTA) which is classifiable with Chapter Heading 9965/9967 of the GST Tariff Act, 2017 and Goods and Service Tax in respect of said service is payable by the recipient under reverse charge mechanism.
• The issue is whether Goods Transport Agencies (GTA) service in respect of Cotton Seeds "Banaula" being the agricultural produce in terms of Entry at serial No.12/2017-Central no. 21 Tax in Notification Rates 28 June, 2017 is exempted or not?
• The authorities observed that Hon'ble Supreme Court of India in the case of Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar Versus Commissioner of Central Excise and Service Tax, Alwar cited as 2022 Live law (SC)203 has held that the exemption notification should not be liberally construed and the beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication.
• The services provided by a goods transport agency in relation to transportation of cotton seeds in a goods carriage are classifiable under heading 9965 and leviable to CGST @2.5%, provided that credit of input tax charged on goods and services used in supplying the service has not been taken, else @6%, under Sr. No. 9 of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.
• Cotton Seed (Banaula) is not eligible for exemption from payment of GST on GTA services as per Notification No. 12/2017-Central Tax (Rate) dt. 28.06.2017(Tariff heading 9965/9967).
• GST chargeable is 5% (2.5% CGST and 2.5% SGST) on GTA services availed by the applicant for transporting Cotton Seed (Banaula) provided that credit of input tax charged on goods and services used in supplying under the service has not been taken, else @6%, under Sr. No. 9 of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.