Vide Circular No. 19/19/2017-GST dated 20.11.2017, the taxability of Custom Milling charges for Paddy to Rice has been explained and clarified.
In Chhattisgarh state, the Government is procuring Paddy at a support price from farmers through various Co-operative Societies. The Paddy so procured is then issued to Rice Mills for custom milling of paddy, and Rice is delivered to the Government through State Civil Supplies Corporation for sale through the Fair Price Public Distribution System.
For Custom Milling, the service charges as fixed by the Central Government are paid on which GST is also paid by the Government. When a rice miller mills additional quantity, he is paid Protsahan Rashi (Additional Encouragement Amount) based on quantity milled, but the Government is not paying GST on this.
Please guide as to whether this Protsahan Rashi is not liable to GST? If so kindly share relevant provision/notification.
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In Chhattisgarh state, the Government is procuring Paddy at a support price from farmers through various Co-operative Societies. The Paddy so procured is then issued to Rice Mills for custom milling of paddy, and Rice is delivered to the Government through State Civil Supplies Corporation for sale through the Fair Price Public Distribution System.
For Custom Milling, the service charges as fixed by the Central Government are paid on which GST is also paid by the Government. When a rice miller mills additional quantity, he is paid Protsahan Rashi (Additional Encouragement Amount) based on quantity milled, but the Government is not paying GST on this.
Please guide as to whether this Protsahan Rashi is not liable to GST? If so kindly share relevant provision/notification.
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In the scenario described, the Protsahan Rashi (Additional Encouragement Amount) paid to rice millers based on the additional quantity milled is not liable to GST. The exemption from GST on Protsahan Rashi is supported by Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, specifically under Schedule II - Activities or Transactions which Shall be Treated Neither as a Supply of Goods Nor a Supply of Services.
As per this notification, the Protsahan Rashi provided to rice millers qualifies as a transaction that shall not be treated as a supply of goods or services for GST purposes. Therefore, the Government's decision not to levy GST on the Protsahan Rashi aligns with the provisions of this notification.
For further clarity or specific details, it is advisable to consult with a tax expert or legal advisor familiar with GST regulations to ensure compliance with the current tax laws.
Relevant Provision:
- Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017
- Schedule II - Activities or Transactions which Shall be Treated Neither as a Supply of Goods Nor a Supply of Services
From India, Gurugram
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35As per this notification, the Protsahan Rashi provided to rice millers qualifies as a transaction that shall not be treated as a supply of goods or services for GST purposes. Therefore, the Government's decision not to levy GST on the Protsahan Rashi aligns with the provisions of this notification.
For further clarity or specific details, it is advisable to consult with a tax expert or legal advisor familiar with GST regulations to ensure compliance with the current tax laws.
Relevant Provision:
- Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017
- Schedule II - Activities or Transactions which Shall be Treated Neither as a Supply of Goods Nor a Supply of Services
From India, Gurugram
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Order No. 1-2018 Extension of date for submitting the statement in FORM GST TRAN-2.pdf