The Appellate Authority for Advance Rulings (AAAR), Maharashtra has held that GST cannot be levied on dried and polished turmeric.
Earlier, the Maharashtra’s Authority for Advance Ruling (MAAR) has ruled that dried and polished turmeric was not covered under the definition of agricultural produce and would attract 5 per cent GST. Aggrieved by this ruling, the appellant, a commission agent in the APMC Mandi, moved the MAAAR, which set aside the ruling by MAAR.
The Applicant, Nitin Bapusheb Patil has been a registered person under GST Act, 2017, as a ‘Commission Agent’ in APMC, Sangli, Maharashtra, renders his services to the farmers in relation to the supply of Turmeric’ (Whole Turmeric Not in powder form) to traders in APMC, Sangli. Applicant is also registered as a ‘Commission Agent’ under the APMC Rules and Regulation. Based on the tender/auction, if farmer and buyer mutually agree to sale and purchase, the Applicant, as a commission agent, facilitates activities ancillary to supply of agriculture product Turmeric in APMC, for which he gets a fixed commission at the rate of 3% as per APMC regulations. Applicant does not do any sort of trading of turmeric.
On appeal, the appellate authority observed that fresh turmeric contains moisture, and is blackish in color, which renders the fresh produce perishable and unsustainable. To make it more marketable, the raw turmeric is subjected to post-harvesting operations including boiling, drying and polishing, which are carried out by the farmers on their farms, Thus, it is clear that the impugned product i.e., dried turmeric (whole) is a produce of the cultivation of a plant, which is subjected to post-harvesting processes.
The bench relied on laboratory test reports which certified that there is no difference between the essential characteristics of raw turmeric and dried turmeric and both samples had oil and curcuminoid content, though in different concentrations.
Based on these arguments, authority declared that the said product satisfied all the conditions required to qualify as ‘agriculture produce.’ Accordingly, though the applicable rate for turmeric (in whole form and not in powder form) is 5 per cent,“the first supply (in whole form-not in powder form) by farmers, being supply by non-taxable persons on the Agriculture Produce and Marketing Committee (APMC), is not liable to GST.”
Commentaires