The Telangana Authority of Advance Ruling (AAR) mentioned that in two rulings that seeds are not being produced via agricultural and must be levied with the GST a growth that builds the issues for the agriculture sector in the subsequent times.
In both, the rulings AAR mentioned that seed is treated in a separate way from grain.
The law is subjected to grain and seed would vary and hence concessions subjected to grain produced via a cultivator would not be subjected to seed mentioned by the rulings dated 11th Feb.
The firms are providing the goods that are being provided via the cultivation of plants said AAR. it indeed mentioned that the firms who were involved in the production and agriculture seed selling along with the procedure of production which they had been obtaining for specific services like cleaning, drying, grading, and packing to the job workers concerning to the seeds production.
“The authorities have applied the principle of ejusdem generis, that is general words should take colour of the specific words and accordingly, said Harpreet Singh, partner, indirect taxes at KPMG in India. These rulings held that raw material used in definition of agricultural produce is confined to food, fibre, etc., which can be consumed, and as seeds are not consumed but cultivated, the same are liable to GST.”
Agriculture does not come under the tax system in India for both the direct and the indirect tax. The tax experts mentioned that the seeds got privileged beneath the GST compliance and the agriculture produce from the seeds or services concerning to the agriculture produce are indeed get privileged from GST.
The cost of the agriculture chain would be affected if the services concerning the seeds production come beneath GST.
Beneath the GST the tax might be applied on the chain. The same implies that GST will then lastly subjected to be levied on the customers.
Humans who directly consumes is said to be the specific words or in the industry, but not in cultivation AAR ruled for Ganga Kaveri.
The same words show that the direct consumption via humans or in the industry but not in cultivation seeds supply would not draw beneath the agricultural produce as the seed would not fulfil the utilities given in it. “In common parlance, one would tend to perceive seeds to be agricultural produce and hence not liable to GST, said Singh.”
AARs is subjected to the firms who approached the court sometimes they are avail as a precedent in the case law. Inside the former times, the tax council has initiated the notices following one AAR ruling.
Seed Processing service is exempted under notification No 12/2017 and the chapter heading is 998611. Ruling is given without going through the notification and explanatory notes to the code list