Tax on Agriculture: GST applicable on seeds used in agriculture say two tax rulings
The Telangana Authority of Advance Ruling (AAR) has said in two rulings that seeds are not “agricultural produce” and should attract goods and services tax (GST), a development that could create complications for the agriculture sector in the future.
In both the rulings, the AAR said that “seed” is treated separately from “grain”.
The law applicable to grain and seed will be different and therefore concessions applicable to grain produced by a cultivator will not be applicable to seed, said the rulings of February 11.
The AAR rulings, in the case of Ganga Kaveri Seeds and Narasimha Reddy & Sons, applied the ejusdem generis principle, said tax experts.
Both the companies are supplying goods which are produced from cultivation of plants, the AAR ruled. It said the companies were engaged in the production and sale of agricultural seeds and in the process of production they outsourced certain services such as cleaning, drying, grading and packing to the job workers in relation to the production of seeds.
