Page 117 - GSTL_14th May 2020_Vol 36_Part 2

2020 ] GUJARAT CO-OP. MILK MARKETING FEDERATION LTD. v. UNION OF INDIA 219
11/2017-Central Tax (Rate)]. Accordingly, the activity of chilling and pack-
aging of milk provided by way of job work, attracts levy of GST @ 5%.
5. As stated by you, job workers make substantial investment in plant and
machinery for chilling and packing of milk. Exempting chilling and packing
of milk would block input credit of job workers and increase their costs.”
22. At this juncture it may be germane to refer to clause (i) of Heading
9986 [Serial No. 24 of the Table to Notification No. 11/2017, dated 28-6-2017] and
sub-clause (c) of clause (i) of the Explanation thereto, which read thus :
“(i) Support services to agriculture, forestry, fishing, animal husbandry.
Explanation.- “Support services to agriculture, forestry, fishing, animal hus-
bandry” mean -
(c) processes carried out at an agricultural farm including tending, prun-
ing, cutting, harvesting, drying, cleaning, trimming, sun drying, fu-
migating, curing, sorting, grading, cooling or bulk packaging and
such like operations which do not alter the essential characteristics of
agricultural produce but make it only marketable for the primary
market.”
On a perusal of paragraph 3 of the impugned circular, it is evident that the same
is based on sub-clause (c) of clause (i) of the Explanation to clause (i) under
Heading 9986, inasmuch as, according to the respondents the process of chilling
and packing of milk is not usually done by the cultivator or producer and are not
carried out at an agricultural farm.
23. In the opinion of this Court, if the petitioners were claiming that the
support services to agricultural produce fall under sub-clause (c) of clause (i) of
the Explanation, the respondents may have been justified in coming to such con-
clusion. However, it is the case of the petitioners that the support services are of
packing and storage of agricultural produce falling under sub-clause (e) of clause
(i) of the Explanation which reads thus : “(e) loading, unloading, packing, storage or
warehousing of agricultural produce”.
24. In the present case, the agricultural produce in respect of which
support services are availed is raw unprocessed milk. It cannot be disputed that
for storage of milk it would have to be chilled. Milk cannot be stored without
chilling as otherwise it would get spoiled. Therefore, storage of milk would in-
clude chilling of milk. Chilling of milk does not alter any of its essential charac-
teristics and it still remains raw milk, and it is this raw milk which is thereafter
packed. Therefore, chilling and storage of raw milk and packing it would clearly
fall under sub-clause (e) of clause (i) of the Explanation. Consequently, if the raw
milk is only stored and packed, the support services would fall under Heading
9986 of the Table to Notification No. 11/2017-Central Tax (Rate).
25. In the impugned circular, it is the case of the respondents that
chilled and packed milk for retail sale is not covered by the definition of agricul-
tural produce. While saying so, what is lost sight of is that support services are
not provided to chilled and packed milk, but support services of storage and
packing are provided to raw milk which is an agricultural produce. Therefore,
the very basic premise on which the respondents have proceeded is fallacious
and based on a factually incorrect premise. Another ground stated is that such
processes are not carried out at an agricultural farm. This ground is based on a
GST LAW TIMES  14th May 2020  117