Page 112 - GSTL_14th May 2020_Vol 36_Part 2

214 GST LAW TIMES [ Vol. 36
apex body of various dairies located all over the State, and the interest of such
farmers and agriculturists co-operative societies being the prime concern of the
Federation, a letter dated 1-8-2018 was submitted by the Federation before the
Government of India seeking confirmation about rate of GST being nil for milk,
chilling and packing services.
10. In reply thereto, Circular F. No. 354/292/2018-TRU, dated 9-8-2018,
has been issued by the Government of India through its Tax Research Unit
whereby it is clarified that chilling and packing of milk is not exempted from
GST. It is also clarified that services by way of job work in relation to all food and
food products falling under chapters 1 to 22 attract GST at the rate of 5% and ac-
cordingly, the activity of chilling and packing of milk by the job workers attract
GST at the rate of 5%.
11. It is the case of the petitioners that there are several contractors with
whom agreements are made by the dairies for operating and maintaining milk
chilling centers in the State and also in other States. All such contractors supply
the same services, that is, chilling and storing of milk, and packing of milk in
pouch. Since all the dairies, namely, the member Unions of the Federation are
selling and supplying milk all over the country and since their activities are not
confined only within the State of Gujarat, chilling centers are kept and main-
tained at various places in the country, and milk belonging to the dairies is
stored in a chilled condition and then packed, as required by the dairies at all
such chilling centers.
12. Since the Government of India through TRU has clarified that milk
chilling and packing was not an exempt service, the Federation has informed the
dairies about this clarification; and accordingly, the dairies have been discharg-
ing the burden of GST on milk chilling and packing services rendered by all con-
tractors. Since GST is an indirect tax and the contractors of the dairies are not to
be saddled with liability and burden of such indirect tax for the above services
supplied by them to the dairies, the contractors have been depositing GST with
the Government on milk chilling and packing charges invoiced and collected
from them from the dairies, and in turn the dairies have been reimbursing the
contractors with the amount of GST so deposited by them with the Government
in addition to payment of milk chilling and packing charges. It is thus the dairies,
that is, the petitioner Nos. 2 to 5 herein, who have been bearing burden of GST
on milk chilling and packing service supplied to them by the contractors. In ad-
dition to the regular payment of GST being made after the above referred circu-
lar and clarification by the Government of India, the dairies have also reim-
bursed the contractors with the entire amount of GST recoverable on milk
chilling and packing services supplied by them for the period prior to the above
referred clarification by the Government of India. A substantial financial burden
for such past supplies is borne and discharged by the dairies, and GST burden at
the rate of 5% is being discharged regularly for the period after clarification of
the Government also.
13. It is the case of the petitioners that the Central Government has
granted exemption to milk chilling, storage and packing service by virtue of Seri-
al No. 24 of Notification No. 11/2017, dated 28-6-2017, but this exemption is now
denied to the petitioners by virtue of the Circular F. No. 354/292/2018-TRU, dat-
ed 9-8-2018 issued by the TRU. The petitioners are, therefore, constrained to de-
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