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In case of purchase of tobacco leaves/bhukko from the agriculturist, the applicant is liable to pay GST on RCM basis at 5% in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 109 of Schedule I. The applicant is liable for payment of GST at the rate of 12% on the job work process of coating, done in respect of tobacco leaves supplied by other registered persons.

Reverse charge mechanism— The applicant, is engaged in the activity of procuring raw tobacco from farmers and consequent sale of unmanufactured tobacco.

It is the applicant's contention that they sell some part of this goods/product, so procured from the farmer/agriculturist, on as it is basis, without any further process.

The applicant raised the following question for advance ruling viz,-

(i) Whether for the purchase of raw tobacco from farmer [including naturally broken tobacco known as 'tobacco leaves or tobacco bhukko'] is covered under reverse charge mechanism?

(ii) What would be the rate of tax in case of coating process is done on unmanufactured tobacco. If the applicant carried out the process of coating on the tobacco belonging to other person [job work basis] whether registered or otherwise.

Held that—

In case of purchase of tobacco leaves/bhukko from the agriculturist, the applicant is liable to pay GST on RCM basis at 5% [2.5% CGST and 2.5% SGST] in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 109 of Schedule I.

Applicant is liable to pay GST on forward charge basis at 5% [2.5% CGST and 2.5% SGST] in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 109 of Schedule 1, in respect of trading of tobacco leaves/bhukko, procured from agriculturist, subject to the condition that they are engaged in trading of tobacco leaves/bhukko, procured from agriculturist, on as such basis i.e. without undertaking any further process on the same

In case of supply of unmanufactured tobacco leaf consequent to coating the same with natural edible gum, the applicant is liable to pay GST at 28% [14 % CGST and 14 % SGST] in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 13 of Schedule IV. However, it is made clear that in case of supply of the said coated tobacco to the customers in gunny bag with their name being printed/mentioned on the gunny bags so as to identify the lot, then the applicant would be liable to pay GST at 28% [14 % CGST and 14 % SGST] in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 13 of Schedule IV, along with 71% compensation cess in terms of notification No. 1/2017-Compensation Cess (Rate) dated 28.6.2017 (Sr. No. 5).

The applicant is liable for payment of GST at the rate of 12 % (6% CGST and 6% SGST) in terms of notification No. 20/2019-C.T. (Rate), dated 30-9-2019 on the job work process of coating, done in respect of tobacco leaves supplied by other registered persons.

In case of purchase of tobacco leaves/bhukko from the agriculturist, the applicant is liable to pay GST on RCM basis at 5% in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 109 of Schedule I. The applicant is liable for payment of GST at the rate of 12% on the job work process of coating, done in respect of tobacco leaves supplied by other registered persons.

Reverse charge mechanism— The applicant, is engaged in the activity of procuring raw tobacco from farmers and consequent sale of unmanufactured tobacco.

It is the applicant's contention that they sell some part of this goods/product, so procured from the farmer/agriculturist, on as it is basis, without any further process.

The applicant raised the following question for advance ruling viz,-

(i) Whether for the purchase of raw tobacco from farmer [including naturally broken tobacco known as 'tobacco leaves or tobacco bhukko'] is covered under reverse charge mechanism?

Held that—