Page 113 - GSTL_14th May 2020_Vol 36_Part 2

2020 ] GUJARAT CO-OP. MILK MARKETING FEDERATION LTD. v. UNION OF INDIA 215
posit substantially high amounts as GST for milk chilling and packing charges
recovered from them by their contractors. The petitioners have suffered because
substantial amount running into several crores of rupees had to be deposit-
ed/paid as GST for the period prior to issuance of the above referred circular,
and the petitioners are constrained to pay/deposit huge amount running into
crores of rupees for similar services regularly provided by the contractors, for
chilling, storing and packing milk belonging to the petitioners. Thus, huge finan-
cial burden falls on the petitioners, who are obliged to reimburse the contractors
with GST deposited by them with the Government on milk chilling and packag-
ing services supplied to the petitioners for their milk. According to petitioners,
these liabilities are not only contrary to the exemption allowed by the Govern-
ment, but it is also against the objective of the Government of not imposing taxes
on a product like milk and on activities of farmers and agriculturist co-operative
Societies. It is in these circumstances, that the petitioners have approached this
Court seeking the reliefs noted herein above.
14. The respondents have filed an affidavit-in-reply in response to the
averments made in the memorandum of petition, wherein a reference has been
made to Serial No. 24 of Notification No. 11/2017-Central Tax (Rate) and it is
stated that chilling of milk is usually not done by a cultivator or producer of milk
nor it is carried out for making it marketable in the primary market. Chilling
takes place in chilling plants and is carried out as part of the process for making
milk ready for sale in the secondary and tertiary market. The farmer or agricul-
turist who produces milk does not sell chilled milk in the primary market. Thus,
it is clear that chilled milk is not an agricultural produce therefore, packing of
chilled milk cannot be called as packing of agricultural produce.
14.1 It is further stated that the issue of GST rate on packing of pro-
cessed milk was discussed in the 22nd meeting of the GST Council and the
Council recommended a rate of 5% on job work services in relation to food and
food products falling under Chapters 1 to 22 of HS Code to cover such process
vide para 24.3(i) of the Minutes of the 22nd GST Council Meeting held on 6th
October, 2017. Thus, chilling and packing of such chilled milk is not exempt from
GST. Services by way of job work in relation to all food and food products falling
under Chapters 1 to 22 attract levy of GST @ 5% vide Serial No. 26(i)(f) of Notifi-
cation No. 11/2017-Central Tax (Rate), dated 28-6-2017 as amended vide Notifi-
cation No. 31/2017-Central Tax (Rate), dated 13th October, 2017. Accordingly,
the activity of chilling and packaging of such chilled milk provided by way of job
work attracts levy of GST @ 5%. Therefore, the petitioners’ claim that such ser-
vices are exempt from GST is not legally and factually correct. It is further
averred that the circular or clarification issued by TRU is not contrary to any le-
gal position or GST Act or the notifications issued thereunder. Further, by setting
aside the impugned circular of TRU, the petitioners or their job workers cannot
escape or be exempted from payment of GST on such services as the liability to
pay GST on such services provided by their job workers/contractors are imposed
by virtue of Serial No. 26(i)(f) of Notification No. 11/2017-Central Tax (Rate),
dated 28-6-2017 as amended vide Notification No. 31/2017-Central Tax (Rate),
dated 13-10-2017 on the recommendation of the GST Council. It is further sub-
mitted in the affidavit-in-reply that the petitioners have not challenged the valid-
ity of Serial No. 26(i)(f) of Notification No. 11/2017-Central Tax (Rate), dated

GST LAW TIMES  14th May 2020  113