Dismissed

13/WBAAAR/APPEAL/2019 of M/S T P Roy Chowdhury & Company Pvt. Ltd.

GST AAAR26 Sept 201913/WBAAAR/APPEAL/2019

Case brief

AI extract

What is this about?

The West Bengal Authority for Advance Ruling disposed of an appeal questioning the exemption of stevedore services for imported yellow peas. The court upheld the ruling that exemption does not apply as the primary market was in a foreign land, failing the legislative intent to boost the domestic agricultural sector.

What did the court decide?

The appeal filed against the Advance Ruling order is dismissed. The impugned advance ruling order is confirmed.

13/WBAAAR/APPEAL/2019 of M/S T P Roy Chowdhury & Company… — GST and Indirect Tax | GST AAAR (2019)

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WEST BENGAL^{APPELLATE AUTHORITYFOR ADVANCE RULING}

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AT I4,BE,LIAGHATA^{ROAD, KOLKATA-7OOOls}

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Before:

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Sri. A.P.S Suri,^Member

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Sri. Devi Prasad^{Karanam,Member}

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In the matter of

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Appeal case No.^{13 /WBAAAR/APPEAL1}}|9dated26.09.2019}

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-And-

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In the matter of:

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An Appeal filed under^{Section 100(l) of the West Bengal Goods and ServicesTax Act,2017l} Central Goods and^{ServicesTaxAct,2Ol7,by M/s T.P. Roy Chowdhury & CompanyPvt' Ltd,} 53B Mirza Ghalib^{Street, Kolkata-700016 against the Ruling passed by the West Bengal} Advance Ruling^{AuthorityvideOrderNo. l7/WBAAR/2019-20dated 19.08.2019.}

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Present for the Appellant:^{Sri Amal Kanti Das,Advocate}

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Sri SandiP Banerjee,^Accountant

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present for the Respondent: Sri Pandiyaraj G. V., Assistant Commissioner^{CGST &} CX, Park Street^Division

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Matter heard on: 10.12.2019 Date of Order: 23.12.2019

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l. This Appeal^{has been filed by M/s T.P. Roy Chowdhury& Company Pvt' Ltd} (hereinafter referred to as "the^{Appellant") on 26.09.2019 againstAdvance Ruling} Order No. 17IWBAAR/2019-20^{dated 19.08.2019, pronouncedby the West Bengal} Authority for Advance^{Ruling (hereinafter referredto as the "WBAAR")}

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The Appellant, holding^{GSTINNo. I9AAACT937}R|ZE., provides serviceas a} stevedore. The Appellant^{provided loading and unloading services to imported raw} whole yellow^peas.

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The Appellant^{sought an advanceruling under section 97 of the West BengalGoods} and Services Tax Act,20l7l^{the Central Goods and Services Tax Act,2017,} (hereinafter collectively referred^{to as "theGSTAct")on the following questions:}

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Page I of 4

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(i) whether imported^{raw whole yellow peas are agriculturalproduce,and}

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(ii) whether services by^{way of handlingthe imported raw wholeyellow peasis} eligible for exemption^{underSl. No. 54(e) of NotificationNo' 1212017 -} Central Tax^{(Rate) dated 28.06.2017 (corresponding State NotificationNo.} 1136 FT dated 28.06.2017),^{as amendedfrom time to time(hereinafter} collectively referred^{to as "the Exemption Notification")}

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The WBAAR in its^{order dated19.08.2019ruled that ExemptionNotification is not} applicable to the^{Appellant's serviceof loading, unloading, etc', after the cargo of} yellow peas imported from^{foreign land reachesthe port of entry.}

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The Appellant^{has filedthe instantAppealagainst the above AdvanceRuling with the} prayer to set aside/modify^{the impugned AdvanceRulingpassed by the WBAARor} pass any such further or^{other ordersas may be deemed fit and proper in the facts and} circumstances of the^{case on the followinggrounds:}

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(a) The percentage of broken^{grain or splitkernel comparedto the consignment} volume is minor and^{insignificant and is a result of natural handling of the} consignment. The^{importedraw whole yellow peaswere not subjectedto any} process by any machinery^{or mill and so the ExemptionNotification will apply in} case of ApPellant's^service.

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(b) The WBAAR erred in^{interpreting the primary marketas nowhere it is mentioned} that the services^{coveredunder Sl. No. 54(e) of the Exemption Notificationis} restricted to the^{primary market or the farm level'}

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(c) The WBAAR erred in^{interpreting the meaning of "agricultural produce".The} conditions of being^{agriculturalproduce as defined under 2(d) of Notes to the} Exemption Notification^{are mutually exclusive'}

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(d) The AAR, Andhra Pradesh^{in the matter of M/sSSSVKCold StoragePvt. Ltd. in} order no. AAR/AP/02(GSTy20l8^{dated 28.03.2018 observedthatthe benefitsof} exemption under the^{ExemptionNotification is not person specific. It is equally} applicable for agriculturalproduce^{in caseof farmersas well as traders. Rawwhole} yellow peas fall under serial no.^{45 of NotificationNo. 2/2017} -^CentralTax (Rate) dated 28.06.2017^{(corresponding State NotificationNo. ll26 FT dated} 28.06.2017), as amended^{from time to time (hereinaftercollectivelyreferred to as} ,,the Rate Notification") as "dried leguminous vegetables, shelled, whether or not skinned or split"^{in the exemptedcategory. So services relatedto exempted goods} are also eligible for exemPtion.

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(e) No IGST is charged on the consignment^{as evident from the bill of entryjustifying} the imported^goods to^{be agriculturalproduceandthus exemptedfrom taxation.}

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Page 2 of 4

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During the course of hearing^{the Appellant reiteratedthe points as stated in the} Grounds of Appeal.^{The Appellantsubmitted that as per test report,Certificate} No.1903200148 dated 20.03.2019^{issuedby surveyor namely SGSIndia Pvt. Ltd.,the} consignment consisted of 1.45%^{broken grain and 10.86% of split kernel. The} Appellant submitted that the^{presenceof broken grain and split kernel was due to} natural handling of the^{productwhile loading and unloadingthe same andis in line} with Circular No. 16ll6l2Ol7-GST^{issued by the CBIC. The consignment has not} undergone the process of de-husking^{or splitting whichare also not carriedout at the} farm level but are carried out by^millers.

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The Appellant emphasizedthat^{its product is an agricultural produce and is exempted} from taxation under the GST Act.^{Thusservicesassociatedin marketingsuch} exempted product are also^{exemptedunder Sl. No. 54(e) of the Exemption} Notification. Further the appellant submitted^{thatthe intentionof the Government is to} keep prices of food grains low and^{in this goal such farm products are includedunder} the Exemption Notification. Services^{associated to farmproductslike transport,} storage, loading and unloading all^{are included in the pricing of the farm products and} levy of tax on such services rvill^{escalate priceswhichis not the spirit of the} Exemption Notifi cation.

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The Appellant argued that the definition^{of agriculturalproducecannot be restricted to} the primary market and farrn^{level.Services like "fumigation" or "warehousing"} [included^{under Sl. No. 54(h) of the Exemption Notification] or services provided by a} 'commission agent for sale and^purchase' [included^{under Sl. No. 54(g) of the} Exemption Notification] are^{generally carriedout only after agricultural product} leaves the farmer's hand. They urged^{to readthe Exemption Notification as a whole to} reach at any logical conclusion.

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The Respondent argued that^{percentage of split kernel is significant enough and so the} essential characteristics of agricultural^{producehave been altered. The Respondent} further submitted that the ruling by AAR,^{AndhraPradeshis not applicable in the} instant case as it is seen that M/s SSSVK^{Cold Storage Pvt. Ltd. providedstorage} space for both the farmers and^{the traders. Further thesetraders were those who} purchased directly from the farmers. In the^{instant case the basic conditionsof being} "agricultural produce" and "primary^{market"were not adheredto.}

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The matter is examined and written^{and oral submissions madebeforeus are} considered. The moot question is that^{whether the Appellant'sserviceis eligible for} exemption under Sl. No. 54(e) of the^{Exemption Nntification.}

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Page 3 of 4

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I L'l'l"rere is no dispute that rerv^{rvholeyellorv pcas are agriculturalprotluce covered undcr} srrial no. 45 ol'the Rate Notification^{anclarecxen"lptcd gcods. Howsver, this particular} 6nsignnreut o[' ralv rvhol^{yellolv pefls was harvestedirl fbreign land anil lhe} concernecJ primary market or the^{far:nrers'tnarket is lcicatedin that ftrreign land. We} ohservc fr*m a {-r{}mhineci^r:eading *f^{entr3"nuntber54 ol thc }-:xcnrption h-otitlcatian} and ciet'iniritx ?tcl) r:f'the^{HxemprtioriNirti{lcstion thxt all sen,iccsand prncesse$ fire} exc}"rcled Lre1.'orrd the^primar,v- market.^{For the sake *f larity cletlnition rrndrr Z(dJ tlte} I:xemption Ntificatiort is^{reproduced here as firllorvirg:}

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"ugrittt|lurtrl Strorhtrc" mersns n.v prur{ucc ot,t{ rtf"cttltit-ctliotr^{o.f plants rtnd rearingo.{} ult tifb .fi:rms of' tmimi.s, {xrcpt^{the reuring*"f' ltttrses.} .lr .fbod, .fihre, ./ut:l,ⁿr ptntetiu! or otlrc:r ,yitiit.tr prortcls, *n tt;hit:h tilhtr rm./i.u'ther llt'ocl;-sitlg^{is dttne tsr} such pr<xtssing i.t dont^tts is^{u,:;ursll,danaby' cullivaloror producet'hichdv,snol} alte r its e ,y^r:ntial ch{}rttcteriitics^{but m}kes it rnurketuhltt.ftsrpriwar.}' murket "

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'!'he term prin:ar3.' market in c<lmrnon parlance refers tei l'armers' market like "tnancli" tlr'"nrllst"'hing a^{plece rvlrere the t'arrners directly.sell their proc{uct to thc bu3'erslikc} rvh61lesalers" nrillers. l'o,.1 prricessing units. tc.^{'l"he spirit ol- tlre lcgislaturc was} igtendeel t boost tlir ogricultilral sl'ctor^{of tlre home countrrvand not thatof a l'oreign} lanel.'l'he prir,iary- rlairkt ir: the^{ir:stant ca$e heing loc}tdin fr:reignshoresdoes not conli:rm tci th dafinitiol^{as statei{above. Further thereis nr: evidenc* that the grilitts} hsve^pot un{ergJr:ue an}' type of^{treatmcnt helore lear.rittg the ltrreign cuntry iirn} lvhere they have bean imported into^lnclia'

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ln vierv ot' ahove dislssion^{rve fi}d no infirmityin the rligpronouncedb3."the wIrAAli.

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'i'hc ftppe1iil ths fails antJ $tfinris ciispos,rr{ rlrt:rc{irrgly.

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S*nd a cnpy of rhis orcler^to thc^{Appeliant undthe Respondentiilr inl'ormatitttt.}

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. t. t:li.

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(Dcvi X:}rass,J W-ata$Tatt1) (A.P"5 Suri) h'trr"ltber h4cn'rb*r W st I3ngat A ?{}llats Alttl:ritv \Ist Ssngal hpyt,l late Atrthilrilv fbr" ,,\ dvatsne RLliing fr Acllratlil Ruling

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F*ge 4 *f 4

13/WBAAAR/APPEAL/2019 of M/S T P Roy Chowdhury & Company Pvt. Ltd.

Case brief

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13/WBAAAR/APPEAL/2019 of M/S T P Roy Chowdhury & Company Pvt. Ltd.

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