Circular No. 16/16/2017-GST [C10-0M4]

I am directed to issue clarification with regard to certain issues brought to the notice of Board as under:

S. No. Issue Comment

1. Is GST applicable on 1. As per GST notification No. 11/2017-Central warehousing of Tax (Rate), S.No. 24 and notification No. 12/2017- agricultural produce Central Tax (Rate), S.No. 54, dated 28thJune 2017, the such as tea (i.e. black GST rate on loading, unloading packing, storage or tea, white tea etc.), warehousing of agricultural produce is Nil. processed coffee beans or powder, 2. Agricultural produce in the notification has been pulses (de-husked or defined to mean “any produce out of cultivation of split), jaggery, plants and rearing of all life forms of animals, except the processed spices, rearing of horses, for food, fibre, fuel, raw material or processed dry fruits, other similar products, on which either no further processed cashew nuts processing is done or such processing is done as is etc.? 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

Circular No. 16/16/2017-GST

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 dehusking 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 (dehusked 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.

2. Is GST leviable on 1. Under Schedule I of the CGST Act, supply of inter-state transfer of goods or services or both between related persons or aircraft engines, parts between distinct persons as specified in Section 25, and accessories for when made in the course or furtherance of business, use by their own even if, without consideration, attracts GST. airlines?

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%.

3. Is GST leviable on It is hereby clarified that services provided to the Central General Insurance Government, State Government, Union territory under policies provided by a any insurance scheme for which total premium is paid

Circular No. 16/16/2017-GST

State Government to by the Central Government, State Government, Union employees of the State territory are exempt from GST under Sl. No. 40 of government/ Police notification No. 12/2017-Central Tax (Rate). Further, personnel, employees services provided by State Government by way of of Electricity general insurance (managed by government) to Department or employees of the State government/ Police personnel, students of colleges/ employees of Electricity Department or students are private schools etc. exempt vide entry 6 of notification No. 12/2017- CT(R)

(a) where premium is which exempts Services by Central Government, State paid by State Government, Union territory or local authority to Government and individuals.

(b) where premium is paid by employees, students etc.?

2. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board.