Seed not an Agricultural Produce: No GST Exemption Applicable on it’s Storage

Telangana Authority for Advance Ruling(AAR Telangana) in the matter of M/s. Ganga Kaveri Seeds Pvt. Ltd has ruled out that No GST Exemption Applicable on Seed Storage as it is not an Agricultural Produce.

The Question was that :

(i) Whether the processes, namely, cleaning, drying, grading and treatment with chemicals (heading No.9986) carried out by the job worker on job work basis are exempt from payment of GST in terms of Sl.No.54(c), (h) of the Notification No. 12/2017- Central Tax (Rate)dated 28-06-2017 read with the definition of “agricultural produce” there under and Sl.No.24(1)(c), (h) and (ill) of the Notification No. 11/2017- Central Tax (Rate)dated 28-06-2017 read with the definition of “agricultural produce” thereunderor any other entry/entries of the above notifications.

(ii) Whether the transport of seeds from the farm lands to storage facility/godown of the applicant, transport of seeds from one storage facility/godown of the applicant to the other storage facility/godown of the applicant, transport of packed seeds from storage facility/godown of the applicant to the distributor and transport of sales-returns, if any, (heading No.9965 or 9967) is exempt from payment of GST in terms of Sl.No. 21(a) of the Notification No. 12/2017- Central Tax (Rate)dated 20-06-2017 or any other entry/entries of the above notifications.

The Authority ruled out that:

(1) Cleaning, drying, grading and treatment with chemicals carried out by a job worker or on job work basis are not exempt under:

a. Serial No. 54(c)(h) of Notification No. 12/2017 as this entry pertains to Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce. This entry relates to exemption of services engaged by a cultivator or an agriculturalist and not to services engaged by Seed Company.

b. Serial No. 24(i)(c) & (h) of Notification No. 11/2017 as this entry pertains to support services to agriculture, forestry, fishing, animal husbandry engaged by a cultivator and not to services engaged by a seed company.

(2) Transportation of seeds from farm to storage facility and then transportation of packed seed from storage facility to distributors is not exempt under:

a. Serial No. 21(a) of Notification No.12/2017, as this entry provides exemption on transportation services to agricultural produce and from the foregoing discussion it is established that seed is not agricultural produce in terms of the definition used in the notification, the transportation services engaged by a seed company are not exempt.

The Appellant M/s. Ganga Kaveri Seeds Pvt. Ltd is engaged in production and sale of agricultural seeds. In the process of production, the applicant outsources certain services such as cleaning, drying, grading and packing to the job workers and stores the seeds in various facilities after processing them. In the process they also transport the seeds by engaging a GTA.

The Ruling was made by Sri B. Raghu Kiran and Sri S.V. Kasi Visweswara Rao.

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