Classification of goods— In the instant case, the applicant is engaged in the business of running a rice mill and the present application has been filed by them seeking ruling regarding classification & applicability of GST on sale of Rejected Paddy Seed which has been informed to be not fit for human consumption & could be used for Industrial Usage, Cattle Feed Production, Manure Production etc.

Questions on which advance ruling is sought: -

i. Classification and applicability of GST Rate on the Sale of Rejected Paddy Seed in a bag of quantity more than 25Kg.

ii. Applicability of S.No. 70 of Notification No. 02/2017 dated 28.06.2017.

iii. Detemination of liability to pay tax on supply of rejected paddy sale.

iv. As the rejected paddy is further categorized based on its usage such usage as Animal Feed, Cattle Feed, Poultry Feed, Industrial use, Manure etc. Would it make any differential classification under each category from the GST perspective based on Harmonized System of Nomenclature?

v. If answer to above is affirmative, then provide the HSN classification & GST rate based on usage separately.

The issues covered in the instant case in hand is regarding classification and applicability of GST on the said rejected paddy seed procured by the applicant from Chhattisgarh State Cooperative Marketing Federation, which the applicant intends to supply further downstream.

Held that— (a) Rejected paddy seed would merit classification under chapter heading 100610, subject to the compliance of the stipulations and conditions as mentioned in the Section note and chapter note specified therein.

(b) The exemption from whole of tax as provided under Sr. no 70 of Notification no. 02/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no. 07/2022-Central Tax (Rate) dated 13.7.2022 is not eligible for supply of “Rejected paddy/ Damaged paddy” for the reasons as discussed above.

(c) “Rejected paddy / Damaged paddy” per se supplied by the applicant, procured by them although merits classification under chapter 100610 subject to adherence of the conditions as stipulated under chapter note and section note discussed supra, would be leviable to tax @2.5% CGST + 2.5% CGGST.

(d) Regarding categorization of rejected paddy based on its usage such as animal feed, cattle feed, poultry feed, industrial use, manure etc., this authority finds that for want of adequate details regarding the process undertaken by the applicant through which such rejected paddy would be converted to animal feed, cattle feed, manure etc., no conclusive ruling regarding classification from the GST perspective based on HSN could be delivered