Circular No. 16/16/2017-CGST, (F. No. 354/173/2017-TRU), Clarifications regarding applicability of GST and availability of ITC in respect of certain services


Circular No. 16/16/2017-GST
F. No. 354/173/2017-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
****
North Block, New Delhi
15th November 2017
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Clarifications regarding applicability of GST and availability of ITC in
respect of certain services
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
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.?
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, fibre, 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
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 dehusking
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 (dehusked
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
inter-state transfer of
aircraft engines, parts
and accessories for
use by their own
airlines?
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%.
3. Is GST leviable on
General Insurance
policies provided by a
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
Circular No. 16/16/2017-GST
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.?
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.
2. Difficulty if any, in the implementation of this circular may be brought to the notice
of the Board.
Yours Faithfully,
Rachna
Technical Officer (TRU)
Email: rachna.irs@gov.in

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