M/S GURU COLD STORAGE PRIVATE LIMITED

The Applicant sought Advance Ruling on following two issues:
1. Whether all cereals, pulses, spices, copra, jaggery (Gur), groundnuts (with or without shell), groundnut seeds, turmeric dried and ginger dried (soonth), cashew, almond, kismis, jardalu, anjeer (fig), date, ambli foal are covered under the definition of 'Agriculture Produce' as defined under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017?
2. If answer to above point is affirmative, then whether the taxability of goods mentioned above changes if they are received for storage either in bulk packing or small or retail packing with or without name or brand name which is not registered under the Trade Mark Act, 1999 where no further processing is done or such processing is done which does not alter its essential characteristics but makes its marketable for primary market?

The Applicant submitted that Notification no. 11/2017-Central Tax (Rate) provides rate of tax as NIL for ‘support services to agriculture, forestry, fishing, animal husbandry’. He opined that ‘Agricultural Produce’ includes all cereals, pulses, fruits, nuts and vegetables, fibers such as cotton, flax, unmanufactured tobacco, etc but does not include manufactured products such as sugar, edible oils, processed food and processed tobacco, and intra-state support services to agricultural produce by way of loading, unloading, packing, storage or warehousing of agriculture produce is chargeable at NIL rate.

It further submitted that the services related to storage of the Agricultural produce, either in bulk packing or small or retail packing with or without name or brand name, which is not registered under the Trade Mark Act, 1999 where no further processing is done or such processing is done which does not alter its essential characteristics but makes it marketable for primary market shall be charged at NIL rate as the same have not been branded with a registered trademark.

The Goods and Services Tax & Central Excise Commissionerate, Ahmedabad North submitted that the products mentioned are produce out of cultivation of plants but become marketable after some further processing which is generally done by the processor, not by a cultivators or producer, therefore all the above products do not cover under the definition of ‘Agricultural Produce’ as defined under the Notification No. 11/2017-Central Tax (Rate). It is also submitted that as all the above products are not covered under Notification No. 11/2017-Central Tax (Rate), the reply of point (2) of application is not relevant.

As per Notification No. 12/2017-Central Tax (Rate) Sl. No. 54 provides NIL rate for services relating to agricultural produce by way of loading, unloading, packing, storage or warehousing of agricultural produce.

‘Pulses are obtained after de-husking or splitting or both, which processes are usually not carried out by farmers or at farm level but are carried out by the pulse millers. Therefore, pulses (de-husked or split) are not agriculture produce. However, whole pulse grains such as whole gram, rajma etc. are covered in the definition of agricultural produce.

Processing of sugarcane into jaggery changes its essential characteristics. Thus, it is not an agricultural produce. The processed dry-fruits (processed cashew nuts, almonds, raisin (kismis), apricot (jardalu), fig (anjeer), date, processed groundnuts, copra, processed spices, including processed turmeric and processed ginger etc fall outside the definition of agriculture produce.  However groundnuts with shell, turmeric and ginger on which no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market would fall within the definition of agriculture produce. The tamarind pod is cracked open, string (fibre) are removed and kernel is taken out. Thus, the resultant tamarind (ambali foal) also do not fall under the definition of agriculture produce.

The term ‘cereal’ refers to various crops, such as wheat, paddy, maize, barley etc. If no further processing is done on such ‘cereals’ or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market, then the same would fall within the definition of agriculture produce and exemption would be available to their loading, unloading, packing, storage or warehousing.

Crux: 1.  Pulses (de-husked or split), jaggery, processed dry fruits such as processed cashew nuts, raisin (kismis), apricot (jardalu), fig (anjeer), date, tamarind (ambali foal), shelled groundnuts / groundnut seeds, and copra are not agriculture produce as defined under Notification No. 11/2017-Central Tax (Rate). ‘Cereal’ on which any processing is done as is not usually done by a cultivator or producer will fall outside the definition of agriculture produce.

Processed spices including processed turmeric and processed ginger (soonth), are not agriculture produce as defined under Notification No. 11/2017-Central Tax (Rate). However, groundnuts with shell, turmeric and ginger on which no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but make it marketable for primary market would fall within the definition of agriculture produce.

Whole pulse grains such as whole gram, rajma etc. and ‘cereal’ on which no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market, fall under the definition of agriculture produce as defined under Notification No. 11/2017-Central Tax (Rate).

2. As all the products mentioned are not covered under Notification No. 11/2017-Central Tax (Rate), answer to this is not relevant.