ORDER

1. This is an application under Sub-Section (1) of Section 97 of the Central Goods & Service Tax Act, 2017 and Uttarakhand State Goods & Service Tax Act, 2017 (hereinafter referred to as CGST/SGST Act) and the rules made there under filed by M/s AS Bharat Refinery (India) Private Limited, F-01, Prakash City, Bajpur Road, Kashipur, Udham Singh Nagar, Uttarakhand- 244713 (herein after referred to as the “applicant”), a private limited company incorporated under the Companies Act, 2013 and registered with GSTIN- 05AAVCA0824G1ZR under the CGST Act, 2017 read with the provisions of the UKGST Act, 2017.

2. In the application dated 22.01.2022, the applicant submitted that:

a) they are engaged in manufacturing of Fortified Rice Kernels- Premix (herein after referred to as the ‘FRK’) and classifying under Heading No. 1904 90 90 ‘Prepared foods obtained by the swelling or roasting of cereals or cereal products (for example, com flakes); cereals[other than maize(com)] in grain form or in the form of flaked or other worked grains (except flour, groats and meal), precooked or otherwise prepared, not elsewhere specified or included’, wherein the applicable GST rate is 18%;

b) vide Notification No. 11/2021-CT (R) dated 30.09.2021, the principal exemption Notification no. 39/2017- CT (R) dated 18.10.2017, was amended, wherein the rate of GST on FRK was reduced from 18% to 5%, when supplied for ICDS or similar schemes of the Central/ State Government;

c) vide letters dated 03.01.2022 and 13.01.2022, the Government of Uttarakhand, instructed them to supply FRK, to 79 listed rice mills for supply under the Public Distribution Schemes.

3. In view of the above facts, ‘the applicant’ is seeking an advance ruling on the following issue:

Whether the applicant is eligible for concessional rate of tax of 5% under the exemption notification no. 39/2017 CT (R) with effect from 1 Oct 2021?

3. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act are the same except for certain provisions; therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the SGST Act.

4. The Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

5. As per the said sub-section (2) of Section 97 of the act advance ruling can be sought by an application in respect of:

(a) Classification of any goods or services or both

(b) Applicability of a notification issued under the provisions of this Act,

(c) Determination of time and value of supply of goods or services or both,

(d) Admissibility of input tax credit of tax paid or deemed to have been paid

(e) Determination of the liability to pay tax on any goods or services or both

(f) whether the applicant is required to be registered

(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term.

5.2 In the present case, the applicant has sought advance ruling on the issue of applicability of a notification issued under the provisions of this Act, therefore, in terms of said Section 97(2) (b) of CGST/SGST Act, 2017, the present application is hereby admitted.

6. Accordingly opportunity of personal hearing was granted to the applicant on 22.02.2022. Sh. Hemant Singhal, Chartered Accountant, on behalf of the applicant appeared for personal hearing on the said date and re-iterated the submission already made in their application. Ms. Preeti Manral, Deputy Commissioner, SGST-Dehradun, Concerned Officer from State Authority was also present during the hearing proceedings. She presented the facts and requested the authority to decide the case on merits.

7. From the record submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing no. 05AAVCA0824G1ZR. Before proceeding in the present case, we would first go through the submissions filed by the applicant and the same is summarized as under:

(a) In order to address anaemia and micro-nutrient deficiency in the country, the Government of India approved Centrally Sponsored Pilot Scheme on “Fortification of Rice & its Distribution under Public Distribution System” for a period of 3 years beginning in 2019-20. Fifteen State Governments including Uttarakhand have consented and identified their respective Districts for implementation of the Pilot Scheme. FRK is purchased by various Rice mills in the region for supply of Fortified Rice under the schemes.

(b) As per Notification No. 39/2017- CT (R) dated 18.10.2017, as amended, the rate of GST on FRK is 5% if the Fortified Rice Kernel (Premix) is supplied for ICDS or similar scheme duly approved by the Central Government or any State Government and when the supplier of such goods produces a certificate from an officer not below the rank of the Deputy Secretary to the Government of India or the Deputy Secretary to the State Government or the Deputy Secretary in the Union Territory concerned to the effect that such goods have been distributed free to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned, within a period of five months from the date of supply of such goods or within such further period as the jurisdictional commissioner of the Central tax or jurisdictional commissioner of the State tax, or jurisdictional officer of the Union Territory Tax as the case maybe, may allow in this regard.

(c) In terms of the referred notification, operational guidelines of the pilot scheme, empanelled list and the correspondences with the government, it is concluded that the supply by the applicant to various rice millers is for the purpose of PDS scheme approved by the Central government and Uttarakhand Government and hence, the applicant is eligible for concessional rate of tax on supply of FRK to Rice mills.

8. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which were filed for our consideration in the application. Now we proceed to decide the issue in hand.

8.2 Before dwelling into the issue, Notification No. 39/2017-C.T. (Rate) dated 18-10-2017 has to be examined carefully. For a clear perspective, the same is reproduced as under:

“In exercise of the powers conferred by sub-section (1) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies the central tax rate of 2.5 per cent on intra-State supplies of goods, the description of which is specified in column (3) of the Table below, falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2), subject to the condition specified in column (4) of the Table below, namely :-

TABLE

8.3 Upon perusal of the above said Notification, we find that in the Notification the goods namely “Fortified Rice Kernel (Premix) supply for ICDS or similar scheme duly approved by the Central Government or any State Government” have been taxed at concessional rate of tax, only on fulfillment of the condition “When the supplier of such goods produces a certificate from an officer not below the rank of the Deputy Secretary to the Government of India or the Deputy Secretary to the State Government or the Deputy Secretary in the Union Territory concerned to the effect that such goods have been distributed free to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned, within a period of five months from the date of supply of such goods or within such further period as the jurisdictional commissioner of the Central tax or jurisdictional commissioner of the State tax, or jurisdictional officer of the, Union Territory Tax as the case may be, may allow in this regard”.

8.3.2 From the above we are of the opinion that since under the head “Description of Goods” at Column (3), the use of words “Fortified Rice Kernel (Premix) supply for ICDS or similar scheme duly approved by the Central Government or any State Government” signifies that the goods in question must be supplied for ICDS or similar scheme duly approved by the Central Government or any State Government, which clearly means that the supplier must be aware beforehand that the particular quantity/ lot/ batch of said goods are intended for supply for ICDS or similar scheme. We further opine that the use of words “….supply for ICDS or similar scheme….” in the Notification is a pre-supply condition to stop the misuse of the exemption at the initial stage i.e. at the time of supply and the condition mandated at Column (4) of the said Notification, is a post-supply condition, to be complied by the supplier and is a end use compliance.

8.3.3 The use of words “…that such goods have been distributed free to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned…” signifies that the agency entrusted with the free distribution of the said goods to the economically weaker sections of the society under a programme, keeps a track record and ensure that said goods (food preparation) have been distributed to the actual beneficiary.

8.4 We observe that in the instant case, as per the applicant’s own admission they have to supply the FRK to the Rice Millers, enlisted in the letter dated 03.01.2022 and not to the agency (ies) entrusted by the Government for free distribution to the economically weaker sections of the society. From the above letter, it appears that the Rice Millers referred to in the letter dated 03.01.2022 have to supply, such goods (food preparation) to the agency (ies) entrusted by the Government in this regard and not the applicant.

8.4.4 Further, at Para 8 and 9 it has been mandate as under:

8.4.5 From the above it is also clear that even the sample has to be taken from the rice Mills, where the fortified Rice is being manufactured and not from the premises of the applicant.

8.4.6 From the above facts on record, we observe that the designated Rice Millers have been requisitioned for supply of the fortified rice and the applicant has neither been supplying the said goods for free distribution to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned, nor they are into final supply of said goods in terms of Notification No. 39/2017-C.T. (Rate) dated 18.10.2017.

8.5 In view of the above discussions, we hold that the applicant is not eligible for concessional rate of tax of 5% under the exemption Notification No. 39/2017-C.T. (Rate) dated 18.10.2017.

8.6 Further, we find that the applicant has cited the Advance Ruling dated 21.10.2021 in the case of M/s Rasi Nutri Foods, passed by the Authority for Advance Ruling, Tamil Nadu, however, we observe that the facts and circumstances of the case of M/s Rasi Nutri Foods, are different from the instant case, in as much as M/s Rashi Nutri Foods, raised invoices to the Tamil Nadu Civil Supplies Corporation, which had been entrusted upon implementation of distribution of Fortified Rice under the Public Distribution System and in the instant case the applicant is supplying FRK to different Rice Millers and not to the organization/agency(ies) which has/have been entrusted for free distribution to the economically weaker sections of the society, under a program duly approved by the Central Government or the State Government.

9. In view of the discussions held above, we rule as under: