The Chattisgarh Authority for Advance Ruling (AAR) held that Rejected or Damaged aPaddy Seeds is not fit for Human Consumption and it attracts 5% GST.
M/s Shraddha Traders, the applicant is engaged in the business of running a rice mill and the present application has been filed by them seeking ruling regarding classification and applicability of GST on sale of Rejected Paddy Seed which has been informed to be not fitfor human consumption & could be used for Industrial Usage, Cattle Feed Production, Manure Production etc.
The applicant has recently been awarded tender by Chhattisgarh State Cooperative Marketing Federation for purchase of Rejected paddy and that out of the said purchase, certain portion could be sold as such. The applicant in the present case is planning for sale of Rejected Paddy in the bags having quantity of more than 25 kg.
The applicant has filed the instant application under section 97 of the Chhattisgarh Goods and Services Tax Act, 2017 seeking advance ruling regarding Classification and applicability of GST on sale of rejected paddy seed which according to them are not fit for human consumption and could be used for Industrial usage, Cattle feed production, Manure production etc.
The applicant contended that the sale of rejected paddy seed in quantities greater than 25 kg per bag would be considered a sale of rejected paddy other than pre packed and labelled. Hence is eligible for tax exemption under S. No. 70 of the amended exemption notification 2/2017 dated July 28, 2017
The AAR Bench consisting of Sonal K. Mishra, Joint Commissioner and Abhinav Aggarwal, Additional Commissioner held that purely based on the description of the goods mentioned in the tender or agreement document with the Chhattisgarh State Cooperative Marketing Federation, i.e., rejected or damaged paddy (not fit for human consumption), would merit classification under chapter heading 100610, subject to stipulations and conditions.
The Bench also stated that the supply of “rejected paddy” or “damaged paddy” is not eligible for the full tax exemption.
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