Admissibility of exemption to loading, storage of agricultural products when imported through sea port.

18 /AAR/2O18 DATED 29.10.2018

Case: M/s. Naga Limited
Citation: 18 /AAR/2O18 DATED 29.10.2018
Issue: Admissibility of exemption to loading, storage of agricultural products when imported through sea port.
Brief facts: M/s Naga Limited is importer of Agricultural products viz. Wheat through various Sea Ports for carrying out Milling operations in their factory premises and manufacture of food products. While clearing the imported wheat from the sea ports, the Applicant is engaging various service providers for providing services such as loading, unloading, packing, storage or warehousing of agricultural products imported for clearing from the sea ports and to bring to their factory premises. Service Providers of the above said services at certain Ports by availing the exemption as per Sl.No. 54 (e) of Notification 12/2O17-CT(Rate) dated 28,06.2017, do not charge GST, on the ground that such services are rendered in relation to Agricultural Products. However, in one or two Ports, the service providers of loading and unloading and warehousing who handled wheat imports feels that the GST exemption Notification for the loading, unloading, packing, storage and warehousing of agricultural produce, mentioned under the Chapter heading 9986 Serial No.54(e) of Notification No.12l2OI7 Central Tax (Rate) dated 28.06.2017 is limited only to the supply chain commencing from the stage of the Cultivator or Producer and extended up to the primary market. It did not include an entire market including further traders and ultimate consumers.
Appellant’s contention: . The applicant submitted an agreement with Karaikal Port, an Invoice for storage charges and Advance Ruling of Andhra Pradesh. They stated that Wheat is agricultural produce and service of loading, unloading, storage at Ports by respective Port authorities are related to agricultural produce and hence should be exempt.
Respondent’s Contention and Judgement: The authority for Advance Ruling stated that it has considered the submissions made by the applicant in their application for advance ruling. From the submissions it was clear that the applicant avails the services of loading, unloading, storage, etc from various service providers. The applicant do not make any of the supplies in question, but are in fact the recipients of the various supplies as stated in their application. Thus, the question is on the liability to pay tax on the services supplied to them and not on the supply made by them. 4.7 Section 95 (a) of CGST and TNGST Act defines 'advance ruling' as
(a) "advance ruling" means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant;
From the above, it was evident that an applicant can seek an Advance Ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant. Further, as per Section 103(1) of the CGST Act, the ruling is binding only the applicant and the Concerned officer or the jurisdictional officer of the applicant. Hence, application submitted by the applicant was not liable for admission.
In this case, it was held that the applicant is the recipient of services and the not the supplier of services. Accordingly, the Application was not liable for admission and therefore rejected without going into the merits of the case.
Decision: Application rejected as outside scope of advance ruling without considering merits.
Comment: GST is new law and the concept of advance ruling has been introduced so as to provide clarity on issues that may lead to litigation. However, the scope of advance ruling is limited to pronouncing decisions on certain specified matters only. According to Section 95(a) of CGST Act, 2017, advance ruling shall be applicable only to the matters pertaining to the supply of goods or services undertaken by the applicant. In the instant case, since the applicant was seeking admissibility of exemption on unloading, loading, packing services procured for importing agricultural produce through sea port in the capacity of recipient of service, the application was rejected on the grounds that the scope of advance ruling is restricted only to the supplier of goods and services not to the recipient of the goods and services. However, it is worth noting that the applicant had referred to another advance ruling on the same issue pronounced in Andhra Pradesh wherein it was confirmed that the storage of imported agricultural produce is also eligible for exemption. However, the decision pronounced by the advance ruling of Andhra Pradesh was ignored while rejecting the present application. It is submitted that GST law is implemented for uniformity and if the advance rulings of different States are taking different stands, the very purpose of uniformity would be defeated. The government should set up centralised body for advance ruling so that contrary decisions on same issue are avoided.
Prepared by: Prateeksha Jain

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18 /AAR/2O18 DATED 29.10.2018

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