M/S PRAGATHI ENTERPRISES

The applicant is registered with The Tobacco Board as “Dealer in Tobacco”

The Applicant has sought Advance Ruling on following issues:
1. What is the rate of GST applicable on tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves?
2. If the applicant purchases tobacco leaves from other dealers who have purchased them from farmers, for the purpose of trading what will be the applicable rate of tax?
3. If the applicant segregates the tobacco into grades depending upon their size ( width), colour/shade, length, texture of the lear etc., and sells such graded tobacco leaf what is the applicable rate of tax?
4. If the tobacco leaves are butted and sold to other dealers what will be the applicable rate of tax?
5. If the applicant gets the tobacco leaves re dried without getting them threshed what is the applicable rate or tax?
6. If the applicant gets the tobacco threshed and re dried on job work basis at GLT plants and then sells such threshed and re dried tobacco leaves what is the applicable rate of tax?

Under GST there are four different entries for tobacco, one under Schedule – I. liable @ 5% (CGST 2.5% and SGST 2.5%) and the remaining heads are in Schedule – IV liable for 28% (CGST – 14% and SGST 14%).

From the respective GST tariff entries in the light of HSN codes mentioned against them It is observed that the two entries SI.No 109 , of Schedule 1, ‘tobacco leaves’ and entry no 13 of IV schedule ‘Unmanufactured Tobacco; tobacco refuse (other than tobacco leaves)’ in the Notification No 1/2017 (CGST Rate) Central Tax are only falling under the same HSN code 2401.

Process of tobacco, from the field to final product, the green leaves undergo curing process, and become eligible commercial commodity, for which the first transaction takes place in between the farmer and the trader on the auction platform. Further, as per the clarification issued by TRU tobacco leaves means, leaves of tobacco as such  or broken tobacco leaves or tobacco leaves stems”. It also clearly express that the leaves as long as they do not loose their basic character as ‘leaves’ shall be considered as tobacco leaves only.

For GST rate of 5%, tobacco leaves means,  leaves of tobacco as such or broken tobacco leaves or tobacco leaves stems

However if the applicant is getting the leaves procured got threshed/ stripped through a job-worker and suppliers to dealers, manufacturers and exporters therefore classified under Schedule IV taxable @ 28%.

CRUX: 1. The GST Rate of tax for the tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves is 5%.

2. The GST Rate of tax for the tobacco leaves purchased from other dealers is 5% (2.5% SGST + 2.5% CGST) as per SI. No 109 of Schedule I Notification No. 1/2017 (CGST) Central tax) Rate. Dt 28.6.2017

3. The GST Rate of tax for the tobacco leaves segregated into grades of different size is 5% (2.5% SGST + 2.5% CGST) as per SI. No 109 of Schedule I Notification No. 1/2017 (CGST) Central tax) Rate. Dt 28.6.2017

4. The GST Rate of tax for the tobacco leaves butted and sold to other dealers is 5% (2.5% SGST + 2.5% CGST) as per SI. No 109 of Schedule I Notification No. 1/2017 (CGST) Central tax) Rate. Dt 28.6.2017

5. The GST Rate of tax for the tobacco leaves re dried without getting them threshed is 5% (2.5% SGST + 2.5% CGST) as per SI. No 109 of Schedule I Notification No. 1/2017 (CGST) Central tax) Rate. Dt 28.6.2017

6. The GST Rate of tax for the tobacco leaves threshed and re dried on job work basis at GLT plants is 28% (14% SGST + 14% CGST) as per SI. No 13 of Schedule IV Notification No. 1/2017 (CGST) Central tax) Rate. Dt 28.6.2017