Page 114 - GSTL_14th May 2020_Vol 36_Part 2

216 GST LAW TIMES [ Vol. 36
28-6-2017 as amended vide Notification No. 31/2017-Central Tax (Rate), dated
13-10-2017; and that the farmer or agriculturist who produces milk does not sell
chilled milk in the primary market.
15. Mr. Paresh Dave, Learned Advocate for the petitioners submitted
that “support services” to agriculture, forestry, fishing and animal husbandry are
chargeable to nil rate of duty by virtue of Serial No. 24 of the Table to Notifica-
tion No. 11/2017-Central Tax (Rate), dated 28-6-2017. “Support services” are ex-
plained under Serial No. 24 to mean inter alia ‘services relating to 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 or agricultural produce’.
Several services are specified under clauses (a) to (g) under the Explanation; and
clause (e) inter alia covers ‘packing, storage or warehousing of agricultural pro-
duce’. It was submitted that admittedly chilling is a support service by way of
storage of milk. Even packing of milk is also specified as a support service. Thus,
the expressions “packing” and “storage” under clause (e) of the Explanation un-
der Serial No. 24 of the Table to the notification cover chilling and packing of
milk in tetra packs or plastic pouches.
15.1 It was further submitted that chilling and packaging of milk are
processes which are undertaken after milk is produced. It was submitted that
under para 4(vii) of the notification, ‘agricultural produce’ is explained 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 es-
sential characteristics but makes it marketable for primary market. It was con-
tended that by milk chilling process or even by packing of milk in plastic pouch-
es, tetra packs or the like, the essential characteristics of milk do not get altered,
but such agricultural produce only becomes marketable. It was submitted that a
harmonious reading of relevant portions and clauses of Serial No. 24 of the above
notification would mean that services relating to rearing of all life forms of ani-
mals for food, or agricultural produce are “support services to agriculture”, and
packing as well as storage of agricultural produce is also considered to be sup-
port services to agriculture. Hence, any produce out of rearing of any life form of
animals is considered to be an agricultural produce for the purpose of the notifi-
cation, and therefore milk which is a produce out of rearing of animals like cows,
buffalos and the like, is also an agricultural produce; and packing as well as stor-
age of such agricultural produce (that is, milk) are support services to agricul-
ture. It was urged that such services are fully exempt from recovery of GST, and
the impugned circular which takes a contrary view is therefore liable to be set
aside.
15.2 The Learned Advocate for the petitioners further submitted that
chilling is a process for preserving milk, and when milk chilling is carried out by
third parties, it is a support service rendered by such third parties for the milk
belonging to dairies. Milk is stored in chilling plants, and thus milk chilling is a
support service by way of storage of milk, which is an agricultural produce. Even
“packing” of milk (which is an agricultural produce within the meaning of this
term under the notification) is also specified as a support service and, therefore,
packing services by the contractors, which would include packing in tetra packs
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