AAR Karnataka Rules on GST Exemption for Maize-Based Cattle Feed

The applicant proposed a dry-milling unit to process maize into corn meal, grits and flour. In the course of processing (pre-cleaning, grading and de-germination), unspecified maize particles arise. These are further milled and sold in powder form as cattle feed. The product reaches the market either (i) directly to end-users for feeding animals, or (ii) to feed/dairy manufacturers who use it as an ingredient for preparing fortified cattle feed.

An application was filed under Section 97 of the CGST Act on 19/04/2024, seeking advance ruling on whether this maize-based product would be exempt under Sl. No. 102 of Notification No. 2/2017 when supplied directly as cattle feed, and whether exemption continues when the same is supplied to manufacturers for further processing into fortified feed. The Authority admitted only these two questions, noting the applicant’s third query on documentation was beyond the scope of Section 97(2).

The product was stated to be classifiable under HSN 2302.10. The Authority, relying on relevant Notifications and Circulars, examined the classification and the nature of supply. It observed that exemption under Sl. No. 102 is available only when the product is marketed and supplied in the form of cattle feed ready for direct animal consumption.

Central Issue: Whether the maize-derived product (classified under HSN 2302.10) is exempt under Notification No. 2/2017 when supplied directly for cattle feeding, and whether the exemption extends when supplied as an ingredient for fortified feed.

AAR’s Decision: The Authority partly allowed the application. It ruled that the product, when supplied as cattle feed for direct animal consumption, is exempt under Sl. No. 102 of Notification No. 2/2017. However, when the same product is sold as an ingredient for fortified cattle feed, exemption is not available; such supplies attract 5% GST rate under Sl. No. 103A of Notification No. 1/2017. The Authority also held that the question on documentation is outside its jurisdiction.

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