Whether exemption is available on turmeric-related
support services which fall under the category of agricultural services
Appellate Authority
for Advance Ruling: Maharashtra
Application
No. MAH/AAAR/AM-RM/07/2022-23 Date:
02.06.2022
M/S. N.B.
Patil
Brief Facts
of the Case
N.B. Patil,
an applicant involved in turmeric-related activities, sought an advance ruling
regarding the applicability of GST to two primary activities:
· Turmeric-Related Support
Services: These services include various activities integral to the cultivation
and processing of turmeric.
· Trading of Turmeric: This
involves the buying and selling of turmeric as a commodity.
The
applicant wanted to ensure compliance with GST regulations and sought clarity
on whether these activities would attract GST and, if so, at what rate.
Relevant
Sections:
· Section 97(2) of the CGST Act,
2017
· Section 98 of the CGST Act,
2017
Questions
for Which Advance Ruling Was Sought:
1. Whether the turmeric-related
support services provided by N.B. Patil fall under the category of agricultural
services, thus exempt from GST.
2. The appropriate classification
and applicable GST rate for the trading of turmeric.
Submission
by Applicant
The
applicant argued that the turmeric-related support services should be
classified as agricultural services under GST, which are typically exempt from
tax. They detailed the nature of these services, emphasizing their essential
role in the agricultural process of turmeric. Regarding the trading of
turmeric, the applicant sought clarity on its classification under the GST
tariff to determine the correct tax rate.
Findings
and Decision by Ruling Authority:
The
Authority for Advance Rulings (AAR) evaluated the nature of services and
trading activities provided by the applicant, along with relevant provisions of
the GST law.
1. Support Services Related to
Turmeric:
· The AAR scrutinized whether
these services could be considered as agricultural support services.
· It was found that these
services were integral to the agricultural activities of turmeric cultivation
and processing.
· The AAR ruled that such
services fall under the category of "support services to agriculture,
forestry, fishing, animal husbandry," which are exempt from GST.
2. Trading of Turmeric:
· The AAR examined the
classification of turmeric under the GST tariff.
· Turmeric, being a commodity,
was classified under a specific tariff heading.
· The trading of turmeric was
thus subject to the GST rate applicable to the trading of goods in that tariff
heading.
Conclusion:
1. Support
Services:
·
The
turmeric-related support services provided by N.B. Patil were classified as
agricultural support services. Consequently, these services are exempt from
GST, aligning with the exemptions provided for agricultural activities under
GST law.
2. Trading
of Turmeric:
·
The trading
of turmeric was classified under the appropriate GST tariff heading, making it
subject to the GST rate applicable to that category of goods. This
classification ensures that the trading activity complies with the relevant GST
regulations and attracts the correct rate of tax.
Impact and
Implications
This
advance ruling has significant implications for businesses involved in similar
activities:
·
Compliance:
Provides clear guidance on how to comply with GST regulations for
turmeric-related services and trading.
·
Tax
Planning: Helps in accurate tax planning and financial forecasting for
businesses in the agricultural sector.
·
Regulatory
Clarity: Offers a precedent for future cases involving similar agricultural
services and commodity trading.
Businesses
should ensure they maintain detailed records and documentation to support their
classification and GST treatment, as outlined in the ruling. For more
comprehensive details, including the specific legal references and
justifications, refer to the complete advance ruling document. This ruling
underscore the importance of seeking advance rulings to obtain clarity on
complex GST issues, thereby avoiding potential disputes and ensuring smooth
business operations.
Disclaimer: All the
Information is based on the notification, circular and order issued by the
Govt. authority and judgement delivered by the court or the
authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
Click here
