M/S SARDAR MAL COLD STORAGE & ICE FACTORY

The Applicant is the owner of cold storage house and provides storage and warehousing facilities to variety of agricultural produce. It has submitted list of various products and the process done on those agriculture commodities before they come into cold storage.

The Applicant sought Advance Ruling on the issue of:
"Whether the goods which comes for storage will come under the definition of agricultural produce or not"'
"Whether the supply of Cold Storage services by the applicant firm to various products as mentioned herein below attracts Nil rate of duty or not as per Notification No. 11/2017 Central tax (Rate) dated 28/06/2017"'

The Applicant submitted that none of the products mentioned in the application goes through any-processing till they come to the cold storage which changes the essential character or marketability of the agriculture produce purchase from the farmers/cultivators by the traders. Thus the goods stored are primarily an agriculture produce and are covered under the definition of the agriculture produce as defined under explanation- 4(vii) of the Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and Notification No. 12/2017 Central tax (Rate) dated 28/06/2017 (at point 2(d) of the notification) hence attracts NIL rate of duty as per S. No. 24 of the Notification No. 11/2017 or S. No 54 of the Notification No. 12/2017.

'Agricultural produce' means any produce out of 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, on which either 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.

Group A
If no further processing is done on goods [Fennel (Saunf), Coriander (Dhaniya), Cumin seeds (Jeera), Carom seeds (Ajwain), Fenugreek Seeds (KasooriMethi Dried) etc] or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes marketable for primary market then the same would fall in the definition of agricultural produce given in aforesaid Notification and exemption would be available . 

Group B
Turmeric (Haldi), Dried Ginger (Sonth): After harvesting front fields the produce is brought to primary market (mandis) as fresh green/ raw turmeric and ginger where it is sold by farmers/cultivators. Further drying and polishing of them is a specialized process not usually carried out by cultivator which converts them into dry haldi (masala) and into dried ginger (Sonth. kirana item) hence changing the essential characteristic. Similarly dates and dry dates also after being sold in primary market go under specific process of soiling, cleaning, drying and polishing which is not usually done by cultivator himself. Hence such processed goods do not belong to produce which are being sold in primary market and processes involved lead to considerable value addition indicating change in essential characteristics.

Group C
Tamarind when harvested from tree consists of brittle outer shell which encapsulates the pulp and enclosed seed which inturn are sold by farmer in primary market. Shelling and removal of seeds to obtain the pulp is usually done by specially designed machines. Hence inner pulp without shell and seeds do not fall under the definition of 'Agricultural Produce' as it loses its essential characteristics.

Group D
Green / raw mango, green kathodi, kachha amla, gila Singhada, hara Matar are harvested by farmer fresh and brought to primary market (mandis) from where its bought by traders/processors who inturn under take certain specific processes such as washing , cutting, shelling, cleaning, drying, packing etc. These processes lead to a considerable value addition as compared to that of product sold in primary market which is in itself reflection of change in there essential characteristic hence cannot be characterized as Agricultural produce.

Group E
Cinnamon is obtained from the inner bark of a tree, species Genus CINNANOMUN. Immediately after harvesting the bark has to undergo a specific process involving hammering , scrapping, drying, cutting, fumigation,packing etc. These process are done by skilled labour and nearly accounts for 60% costs of the final product.
Gum : ' Raw gum is collected by farmers or gum collectors from outer bark ot Acacia tree which after collection is sold in primary market. Later in industrial plants raw gum is cleaned, refined, powered and made in granular form fit to be consumed in foods industries.
Arjuna Chaal :- The bark also goes under certain processing before it is fit to be used in Ayurvedic Industries.

Group F
Groundnuts is harvested from the farms and sold with outer shells in primary market. Later by help of machines outer shell is removed and groundnut seeds are separated.
Same is the case with coconut which is sold in Primary market by the cultivator as commonly known as Naariyal with outer fibrous husk or coir covering . Specialized plants are set up to remove the outer coir (dehusking) and inner hard shell (deshelling). In both the cases farmers are not usually involved in processing of product.

Group G
Dry fruits such as Fig, Almond, Walnuts, Pistchio, Lotus Seed Pop etc.
Dry fruits are obtained by drying of fresh fruits or other plant products. All of them are harvested and sold in primary market by Cultivator as raw and green . These are then purchased by traders and processors who undertake a very specific time consuming process such as cleaning, deshelling, specialized drying, sorting, grading, packing etc.
Hence do not fall under category of Agricultural Produce.

Crux:
1. Goods mentioned under Group A fall under the definition of Agricultural Produce in terms of the aforesaid notification and so supply of cold storage service in relation to these is exempt from the levy of GST. However if any processing is done on these products as is not usually done by a cultivator or producer at farm level , then these would fall outside the definition of agricultural produce as given in the aforesaid Notification and in that case supply of cold storage service in relation to these would remain chargeable to GST.
2. Goods mentioned under Group B to G are not Agricultural produce in terms of the aforesaid notification and so the supply of cold storage service in relation to these would remain chargeable to GST.