Page 90 - GSTL_13th August 2020_Vol 39_Part 2

176 GST LAW TIMES [ Vol. 39
(b) Purchase of the tobacco leaves from other dealers and sell them to
the clients within India and overseas.
(c) Threshing and redrying of the tobacco leaves in their threshing
premises and selling them to the clients in India and to export to
various countries.
(d) Engaging in threshing of redrying of tobacco leaves on job work ba-
sis for other traders or manufacturers.
We have gone through the facts of the case as submitted by the applicant with
respect to the relevant legal position. As seen from the above it is felt that the
transactions of tobacco from auction platform to the supply made to the exporter
are to be interpreted in the light of the relevant notifications and to decide the
rate of tax accordingly. As seen from the different stages of commodity i.e., from
the leaves stage to the final product (manufactured tobacco), the green leaf
plucked from the plant undergoes different types of curing to reduce the level of
moisture to the maximum extent for sustainability and to continue as leaf for fur-
ther process. The tobacco leaf will be entitled as a commercial commodity only
drying (Curing) and normally put to trade in form of bundles. The same will be
traded between the farmer and the trader and trader to trader/manufacturer and
so on. As envisaged from the entries under GST, there are four different entries
for tobacco, one under Schedule-I. Liable @ 5% (CGST 2.5% and SGST 2.5%) and
the remaining heads are in Schedule-IV liable 28% (CGST-14% and SGST 14%).
And there is an entry of tobacco leaves under Reverse charge mechanism also as
explained below :
As per the Notification No. 4/2017-CGST (Rate), the supply of the To-
bacco Leaves shall be under ‘Reverse charge’

No. Tariff item, Description of Supplier of Recipient of goods
sub-heading, supply of goods
heading or Goods
chapter
3 2401 Tobacco Leaves Agriculturist Any registered person

The commodity “tobacco leaves” shall be interpreted in the light of the Entry 109,
Schedule-I of Notification No. 1/2017-Central Tax (Rate) and the Entry No. 3 in-
serted under the Notification No. 4/2017-CGST (Rate) issued for liability under
reverse charge mechanism and the relevant HSN code mentioned against the
description of the commodity i.e., 2401. It is to note that though there are differ-
ent entries with respect to tobacco there is a specific entry in Schedule I of Notifi-
cation No. 1/2017-CGST (Rate) as Tobacco leaves, and for the same the liability
was brought under reverse charge mechanism. Hence it is clear that the com-
modity ‘tobacco leaves’ is distinct from the other entries in this aspect.
As observed from the facts, i.e. process of tobacco, from the field to final
product, the green leaves undergo curing process, and become eligible commer-
cial commodity, for which the transaction takes place in between the farmer and
the trader on the auction platform. Further, as per the clarification issued by The
Department TRU (Tax Research Unit) vide Circular F. No. 322/2/2017/Dec.2017,
“Tobacco Leaves” means, leaves of tobacco as such or “broken leaves” or “Tobacco Leaves
stems”. It clearly expresses that the leaves as long as they do not loose their basic
character as ‘leaves’, shall be considered as tobacco leaves only.
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