TN/AAAR/05/2019(AR) of M/s Rajiv Gandhi Centre For Aquaculture

GST AAAR26 Jul 2019TN/AAAR/05/2019(AR)

Case brief

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What is this about?

The Tamil Nadu AAAR disposed of an appeal seeking to set aside an order imposing GST registration and tax liability on the Rajiv Gandhi Centre for Aquaculture (RGCA). The Authority affirmed the lower order rejecting claims for exemption based on charitable status. In the interest of justice, it upheld the classification of Artemia cysts under CTH 0511.

What did the court decide?

Appeal dismissed with no interference in the impugned order; subject disposed.

What the court decided

AI extract

TN/AAAR/05/2019(AR) of M/s Rajiv Gandhi Centre For… — GST and Indirect Tax | GST AAAR (2019)

TN/AAAR/05/2019(AR) of M/s Rajiv Gandhi Centre For Aquaculture

GST AAAR26 Jul 2019TN/AAAR/05/2019(AR)

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Case brief

AI extract

What is this about?

What did the court decide?

Appeal dismissed with no interference in the impugned order; subject disposed.

What the court decided

AI extract

¶18

Nameandaddressofthe appeliant	RajivGandhiCentre forAquaculture, 3/197,PoompuharRoad,Karaimedu Village,Sattanathapurarn -609 109
GSTINorUser ID	33AAATR636BQLZT
AdvanceRuling Orderagainst whichappealis filed	OrderNo. 9/AAR/2019
Date offilingappeal	30.04.2019
Representedby	S/Shri. N.Viswanathan, R.Ravikumar
JurisdictionalAuthority-Centre	TrichirapalliCommissionerate
Jurisdictional Authority-State	The Commercial Tax Officer, No.16A,sattanathancolony, Sirkazhi-609110
Whether paymentoffeesforfrling appealisdischarged.Ifyes,the amountand challan details	Yes.PaymentofRs.20000/-madevide challansNo.SBIN19043300505655dated 29.O4.2O19&SBIN19043300513284dated 30.o4.2019

¶59

b. The learned TNARA ought to have noted that when they have not disputed thereby accepting that Artemia cysts are artemia, also called brine shrimp, is a species of crustacean and cys/s are eggs of the shrimp from uhich laruae hatch uthich is in turn used as aquatic feed', the product is classifiable only under chapter 23 and such a classification cannot be denied by citing Note to Chapter 23 because the said Note is inclusive one as it does not exclude any animal feeding from heading 2309 but only includes the animal feeding obtained by processing vegetable or animal material to such an extent that tJrey have lost the essential characteristics of the original material. In other words, heading 2309 includes not only the vegetable or animal material which have lost the essentiaf characteristics in the process but also the vegetable or animal materials which have not lost the essential characteristics in the process as long as they are animal feed. Since, admittedly the impugned Artermia cysts is aquatic feed, the sarne is rightly classifrable under heading 2309. The learned TNARA ought to have noted and followed the decision of the Hon'ble Calcutta High Court in Atherton Engineering Co. Pvt. Ltd. Vs. uol l2olo (256) ELT 358j holding that ' I am of the opinion that if an embryo is utithin an egg and it is subsequentlg incttbated in controlled temperature and under hgdration, the laruae which are subsequentlg born do not assume the character of any different product but remain in nature and characteristics the same product or organism uhich is utithin the egg. Therefore, if the eggs did contain an embryo theg could he classified as feeding^materials for^{pranans and oughtto haue} been so^c/assrf ed. These embryos mag not be proper pranDn feed at the time of importation but could become so, afi.er incubation. Refusing to classifg the product as pranan feed on this basis is not reasonable. In deducing the aboue pinciple, I haue taken a lot of guidance from the case of 'Commissioner of Income-tax. u. venkateshu)ara Hatcheries (P.) Ltd. reported in (1999) 23717R 174 (s.c.) (Supra)'. Had the leained TNARA noted the above facts and followed the above decision of the Hon'ble Calcutta High Court, they ought to have seen

¶62

c. The learned TNARA ought to have noted that the term agriculture covers not only cultivation of land and growing crops but includes animal husbandry, raising of livestock, etc. The very fact, Govt. of India, Ministry of Agriculture enacted Coastal Aquaculture Authority Act, 2005 and the Regulatory Authority was created under this Act, which deals with improvement of Aqua farmers in shrimp farming and fisheries. This confirms that aqua farming by farmers is integral part of agricultural production' as has been held by the Hon'ble Tribunal in Suryog Agro Poultry Products P. Ltd. Vs. CC [2OI5 (335) ELT 350) and the Hon'ble Supreme Court in Maheshwari Fish Seed Farm Vs. TNEB IQOO4) 4 SCC 7051, as approvingly quoted in [2OO7 (5) STR 1611], holding that 'A reading of the^judgment shows a research bg looking into seueral authorities, meaning assigned bg dictionaries and finding out how the term is understood in common parlance. The Court held that the term 'agiculture' has been defined in uarious dictionaies both in the nalToLU sense and in the wider sense. In the nalTow sense agianlture is the cultiuation of the field. In the utider sense it comprises of all actiuities in relation to the land including horticulture, forestry, breeding and rearing of liuestock, dairying, butter and cheese-making, husbandry etc.', the TNARA would have noted that the activities of the appellant viz., (a) Research and development activities undertaken by the appellant are technolory development for breeding and farming of new/alternative species with high commercial value viz. fish, prawn, shrimp, crab etc., (b) Testing services provided by the appellant in testing for pathogens of soil, water, feed etc. and chemical analysis of water and soil and (c) Testing services provided by the appellant in testing seed (babies) and adults of diversified aquaculture species viz., Iish, prawn, crab etc. and gene sequencing of spices are eligible for exemption from GST vide entry No.54 of Notification No.I2/2OI7-CT (Rate) covering the services relating to^'rearing of all forms of animals, except horse, for food' since the

¶94

a. ARTEMIA CYST: Heading 05.11 could only cover dead and waste items and not any live item and that such live items if not accepted to fall under chapter 23 has to necessarily go into chapter 3 of the schedule more particularly on account of the chapter note 1 (c)of chapter 3 of the Customs Tariff Act. It is therefore submitted that the item in dispute cannot at all be classified under 0511 of the Customs Tariff Schedule as ordered by the advance ruling authority. During the hearing it was pointed out to the appellant that the Honble Supreme Court in the case of Atherton Engg P. Ltd., versus Comrnissioner reported in 2OO2 (144) E LTA 293 (SC) have approved the decision of tJre Mumbai Tribunal in the case of Commissioner versus Atherton Engg P. Ltd., reported in 2001 (129) E L T 5O2 (Tri. -Mum) holding that live Artemia ryst are classifiable under heading 05.11. However, subsequently on a reading of ttre said judgments it is noticed that the decision of the Mumbai Bench of the Tribunal related to classification of packed Brine Shrimp Eggs requiring processing for conversion into lanrae to become edible bv prawns whereas the product in dispute is one which stood already converted and made ready for consumption by prawns as feed thus making it totally distinguishable to the facts of the case of the appellant. On the other hand, the obsenrations of the Mumbai Bench of the Tribunal confirming that a-fter processing and conversion into larvae the eggs would become edible for prawns as feed by itself support the case of the appellant. The judgment of the Hon'ble Calcutta High Court reported Ln 2010 (256) E L T 358 (Cal) relied in support by the appellant is a later judgment which in fact considered the decision of the Mumbai Bench decision before making their observations as pointed out to direct the authorities to follow their observation and decide the case is more apt and squarely applicable to the case of the appellant on account of which the contrary finding recorded by the advance mling authority touching the classification of the subject goods need to be vacated in the interest of justice

¶168

Shrimp farming and lisheries, cannot be considered as animals that^live independently of people, in natural conditions. Their existence is to the^contrary dependent on people and in artificially created conditions. Even the^definitionof 'wild life' as per the Wild Life Act, includes any animal etc which^{forms part of any} 'habitat'. Habitat refers to the natural surroundings in which an animal^orplant usually lives, which is not so in this case. Here the shrimp are^{rearedin a totally} artificial surrounding. Apart from saying that the society is^{providing sustainable} technologies in aquaculture, the appellant has not established their^{claim for} having their activities covered under the preservation of environment^including watershed, forests and wildlife. When an exemption notification is based^{on end} use, the mission statement of the assessee seeking to avail the exemption,^can certainly be referred to for the purpose of ascertaining their activities^{and the} object and purpose for which they are functioning. It is seen that the^{appellant who} are the R& D arm of MPEDA, and whose mission is to undertake research,^give consultancy and technical services to the farmers, entrepreneurs, and^{scale up the} technologies developed, etc. after assuring the commercial viability of^{aqua products} undertakes various activities to attain the aim of the society, do not conduct^activities covered under the preservation of environment including^{watershed, forests and} wildlife. From the activities undertaken by them, we find that the appellant^imports R & D technologies, uses the same for augmenting the export^{potential of the aqua} products, which is the main aim of the formation of the appellant. All the^training, testing, supply of seeds, fish, etc are done for a charge^{and are commercialin} nature. Preservation of the environment is not their stated objective.^{The activities} undertaken by the appellant is of diverse nature ranging from sensitizing^farmers/ entrepreneurs; training students/academia; undertaking^{testing forpathogens,} quality of farms; supply of fish seeds; artemia Cyst(processed) for fish feed;^etc.. The exemption provided at Sl.No. 1 of Notification No. 12/2O17-C.T.(Rate)^exempts payment of GST onlv in respect of services provided by way of 'Charitable^activities' relating to 'Preservation of environment including^{watershed,forests and wildlife'} (entry related to the proceedings in hand) and the construction of the exemption is not to provide exemption to all the activities^{undertaken by an entity registeredunder} Section L2A of the Income tax Act,^which is^{involvedinactivities relatingto} 'Preservation of environment'. Page | 26

¶194

sL No.	Chepter, Section, Ifeeding, Groupor Sen'iceCode fTariffl	DescriptionofSen'ices	Rete {per^cent.)	Condition
(1)	(2)	(3)	(4)	(s)
54	Heading9986	Sen'ices relatingtocultivationofplants	NiI	Nil
		jandrearingofalllifeformsofanimals, I I^{excqptthereaingofhorses,forfood,} I i^{fibre,furLrar.r'materiaiorother sirnilar} jproductsoragriculturalproducebyrn'ay I"r- I i^{(a)agriculturatroperationsdirectlyrelated} I I^{toproductionofany agriculturalproduce} I^{rncludrrscultivation,han-esting,} I^{threqhins, plant protectionor resring,}	^{(b)r"pptyoffarmlabour;} L.	(c)processescarriedoutat anagricultural t^ I^{farmincludrng tending, pruning,cutting,} l. I^{han'estrng,d.yrng.cleaning-trimming,} I^{sundr-'v{ng-fumigating.curing,sortitrg.} tr. I^{gradtng, coohngorbulkpackaeingand} Iisuchlikeoperationsrrfuchdonotalter&e essential characteristicsofagricutrtural producebutmakeitonlymarketablefor thepriraary market, (d)rentrngorleasingofagro machinery olracantlandr;lith orrlitlrouta structure incidental to itsuse, (e) loading, unloading,packrng" storageor n'arehousingof agriculturalproduce; (f)agriculturalextension sen'ices; (g)serr-icesbyulryAgricultr:ralProduce MarketingCommiueeorBoardor sen-icesprovidedbyaco--issionagent forsaleorpurchaseafagricultural produce-

¶202

	A	nnrxure	:SchemeofClassificationofScrvices
S.I{o.	C-hapter, Srctiono Ilrading or (lroun	Service Cndc {Tariff)	Srn"icrDercription
I	{21	f3l	{4)
596	GroupYt9:9		Olhrrrducation snd lruiningrtrniffrrntleduettinnrlrupJxrrt s(n'ifrf
597		999191	Culturaledueations{rvr{1s
59I*		itfrfi2q2	and r$rrcfltio$ educiitiiln $cryierT
i$J		9e9?e3	(onnnrrciiilrrainifigsndfoaehingseffirc$
6fx,		v9939{	Othcr edrnationandtrainingsrnices nowhere elscclassihsd
60t		9991e5	s{.n/icsinvolving coilductofexaminationforadnrisiunto educrtionaIinstitutionr
6f	:		9993q9

¶217

0306	Cn"usr-rccrllts, II-EETEIERrN SEELLoR Nor, LraE,
	BRI]\lE; SMOKIDCRL,STACEA}iS,IYIIETIIER IN SIIELL
	oR $€'T,I}ETETEER OR NOT COOraErt BEFOREOR DLiRt.^fcrEE strorcn{c^pRocESs;Cnust-+cr-txsr tx
	SEELL, COOI(EDBvSTEAIffNGORBYBOTLTNG Fa
	IlaTER, fl'EETmRORt\OTCETLLED, FROZEN,
	D.RIED, SALTEDORINBRINE;FLOURS,}IEALSAN'D
	PELLETS OFCRIiSTACf-{aiS, FrTrOR ELll{"{N
	CO.-SLBIPTIO:i

¶221

o511	ANIiL{L PRoDUCTS NoT ELSEIaTIERE SPE(;IFIED oR rlicLrDED; DE-aD.$aL\LrLs or Cnr'grgn 1 oR 3,
05l1looo	LBiFITFORIIL!I'.{,AICOSS;T}TPTION ,Bol-incsernen ()ther:	kg.	3Q"t6
05l19l	Productsoffsh orcrustaceans,ntolluscs or other aquatic inverteblates:dead animals oil'Chapter3:
o5rr9110	Fislrnails	kg.	3Ooti
o,5rl9120	Fisht.ails	kg.	3Q"/o
05119130	Othcr fistrrvastc	kg.	3Oo/"
o-51l9190	Othcr	kg.	34"/6
o-51199	Other:

TN/AAAR/05/2019(AR) of M/s Rajiv Gandhi Centre For Aquaculture

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TN/AAAR/05/2019(AR) of M/s Rajiv Gandhi Centre For Aquaculture

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