The Punjab Authority for Advance Ruling (AAR ) Goods And Service Tax, has recently clarified that cotton seed is not an agricultural produce under the GST Act.
The aforesaid observation was made by the Authority when an application was preferred before it by an applicant named M/S Kaka Ram Hari Chand, 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 Services Tax.
The question involved in the application seeking the advance ruling being as to whether there is no liability to pay tax in view of the exemption granted vide notification no. 12/2017, dated 28th June, 2017 issued under section 11 (1) of the CGST Act, 2017 which excepts the tax on GTA services in relation to ‘agricultural produce’, vide entry no. 21(a) in the table appended to the same, read with the definition of the term ‘agricultural produce’ given vide para 2 of the said notification, the Authority observed as follows :
“The definition of agricultural produce under the GST law is very restrictive in nature, for it provides exception only to those produces which are directly harvested from the farms or on which such processing is done by the cultivator to make it marketable which does not change its basic characteristics.”
Thus, drawing its conclusion the Authority opinioned:
“In the case of cotton seed, the same is obtained by way of an industrial processing called ginning, and hence it is debarred from the definition of agricultural produce as per the notification no. 12/2017- Central Tax (Rates), dated 28.06. 2017”
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