Circular No 16/16/2017 GST
F. No. 354/173/2017-TRU 15th
November 2017
Subject: Clarifications regarding applicability of GST and
availability of ITC in respect of certain services
Sr No 1.
Issue
: Is GST applicable on warehousing of agricultural produce such as tea (i.e.
black tea, white tea etc.), processed coffee beans or powder, pulses (de-husked
or split), jaggery, processed spices, processed dry fruits, processed cashew
nuts etc.?
Comment
1. As per GST notification
No. 11/2017-Central Tax (Rate), S.No. 24 and notification
No. 12/2017- Central Tax (Rate), S.No. 54, dated 28thJune 2017, the
GST rate on loading, unloading packing, storage or warehousing of
agricultural produce is Nil.
2.
Agricultural produce in the notification has been defined to mean “any produce
out of cultivation of plants and rearing of all life forms of animals, except
the rearing of horses, for food, fiber, 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”
3. Tea used for making the beverage, such as black tea, green tea, white tea is a processed product made in tea factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation, packing etc. on green leaf and is the processed output of the same.
4. Thus, green tea leaves and not tea is the “agricultural produce” eligible for exemption available for loading, unloading, packing, storage or warehousing of agricultural produce. Same is the case with coffee obtained after processing of coffee beans.
5. Similarly, processing of sugarcane into jaggery changes its essential characteristics. Thus, jaggery is also not an agricultural produce.
3. Tea used for making the beverage, such as black tea, green tea, white tea is a processed product made in tea factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation, packing etc. on green leaf and is the processed output of the same.
4. Thus, green tea leaves and not tea is the “agricultural produce” eligible for exemption available for loading, unloading, packing, storage or warehousing of agricultural produce. Same is the case with coffee obtained after processing of coffee beans.
5. Similarly, processing of sugarcane into jaggery changes its essential characteristics. Thus, jaggery is also not an agricultural produce.
6.
Pulses commonly known as dal are obtained after DE husking or splitting or
both. The process of DE husking or splitting is usually not carried out by
farmers or at farm level but by the pulse millers. Therefore pulses (DE husked
or split) are also not agricultural produce. However whole pulse grains such as
whole gram, rajma etc. are covered in the definition of agricultural produce.
7. In view of the above, it is hereby clarified that processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (DE husked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts etc. fall outside the definition of agricultural produce given in notification No. 11/2017-CT(Rate) and 12/2017-CT(Rate) and corresponding notifications issued under IGST and UGST Acts and therefore the exemption from GST is not available to their loading, packing, warehousing etc. and that any clarification issued in the past to the contrary in the context of Service Tax or VAT/ Sales Tax is no more relevant.
7. In view of the above, it is hereby clarified that processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (DE husked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts etc. fall outside the definition of agricultural produce given in notification No. 11/2017-CT(Rate) and 12/2017-CT(Rate) and corresponding notifications issued under IGST and UGST Acts and therefore the exemption from GST is not available to their loading, packing, warehousing etc. and that any clarification issued in the past to the contrary in the context of Service Tax or VAT/ Sales Tax is no more relevant.
Sr No 2.
Issue
: Is GST leviable on inter-state transfer of aircraft engines, parts and
accessories for use by their own airlines?
Comment
1.
Under Schedule
I of the CGST Act, supply of goods or services or both between
related persons or between distinct persons as specified in Section
25, when made in the course or furtherance of business, even if,
without consideration, attracts GST.
2.
It is hereby clarified that credit of GST paid on aircraft engines, parts &
accessories will be available for discharging GST on inter–state supply of such
aircraft engines, parts & accessories by way of inter-state stock transfers
between distinct persons as specified in section
25 of the CGST Act, notwithstanding that credit of input tax charged
on consumption of such goods is not allowed for supply of service of transport
of passengers by air in economy class at GST rate of 5%.
Sr No 3.
Is
GST leviable on General Insurance policies provided by a State Government
to employees of the State government/ Police personnel, employees of
Electricity Department or students of colleges/ private schools etc.
(a) where premium is paid by State Government and
(b) where premium is paid by employees, students etc.?
(b) where premium is paid by employees, students etc.?
It
is hereby clarified that services provided to the Central Government, State
Government, Union territory under any insurance scheme for which total premium
is paid by the Central Government, State Government, Union territory are exempt from GST under Sl. No.
40 of notification No. 12/2017-Central Tax (Rate). Further, services
provided by State Government by way of general insurance (managed by
government) to employees of the State government/ Police personnel, employees
of Electricity Department or students are
exempt vide entry 6 of notification No. 12/2017- CT(R) which exempts Services by Central Government, State Government, Union territory or local authority to individuals.
exempt vide entry 6 of notification No. 12/2017- CT(R) which exempts Services by Central Government, State Government, Union territory or local authority to individuals.
