Page 111 - GSTL_14th May 2020_Vol 36_Part 2

2020 ] GUJARAT CO-OP. MILK MARKETING FEDERATION LTD. v. UNION OF INDIA 213
under various chapters of the First Schedule to the Central Excise Tariff Act,
1985. Prior to 1-7-2017, a few of the products were chargeable to excise duty,
whereas most of the products like milk, milk powder, etc. were chargeable to nil
rate of excise duty. Most of the activities like chilling of milk and packing of milk
were also not chargeable to any central excise duty or Service Tax at that time.
5. In the normal course of their activities, the petitioner Nos. 2 to 5 have
engaged various contractors for maintaining and operating milk chilling centers,
where milk belonging to the dairies is stored at a particular temperature. In addi-
tion to providing such services of chilling and storing of milk, the contractors are
also providing packing service to the dairies in respect of pouch packing of milk.
Regular agreements are made between the dairies and such contractors, most of
whom are individuals or firm of individuals.
6. It is the case of the petitioners that the dairies have been paying milk
chilling charges as well as packing charges to the service providers in accordance
with the rates agreed between the parties. The charges are paid by the dairies
based on the quantum of work executed or service rendered by the contractors
and the packing charges are paid on the quantum of milk packed. The dairies
have made payment to the contractors in accordance with such invoices, which
according to the petitioners have always been in accordance with rates agreed
under the agreements between the parties.
7. After the introduction of the goods and Service Tax laws with effect
from 1-7-2017, support services to agriculture, forestry, fishing and animal hus-
bandry are classified under heading 9986 of the GST Tariff. The Central Govern-
ment has issued a Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017,
thereby specifying effective rates of GST for various services. At Serial No. 24 of
the table to the above notification, support services to agriculture, forestry, fish-
ing and animal husbandry are specified; and a nil rate of tax is prescribed by the
Central Government in respect of CGST as well as IGST. No condition is laid
down for nil rate of tax for these services. This notification has been brought into
force with effect from 1-7-2017 is still in force.
8. By virtue of the Explanation under Serial No. 24 of the notification,
the Government has explained as to what are the support services qualifying for
nil rate of tax. The term “agricultural produce” is also explained by virtue of par-
agraph 4(vii) of the notification. It is the case of the petitioners that since any
produce out of rearing of any life form of animals is considered to be an agricul-
tural produce for the notification, milk is an agricultural produce for the purpose
of this notification, inasmuch as milk is a produce out of rearing of animals like
cows and buffalos. Since packing as well as storage of agricultural produce is
considered to be support service to agriculture for the purpose of this notifica-
tion, chilling and packing of agricultural produce like milk are support services
to agriculture, and hence chargeable to nil rate of tax. Accordingly, the contrac-
tors of the dairies, that is, petitioner Nos. 2 to 5 herein had not been discharging
liability of GST on chilling and packing services for milk. However, for any other
services, that is, other than the chilling and packing of milk, the levy of GST is
discharged by the contractors at appropriate leviable rates.
9. Though the Federation had received a legal opinion that GST was
not chargeable on milk chilling and packing charges, the Federation being an

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