GST is applicable on rejected/damaged paddy

Last updated: 11 September 2024

Court :
AAAR, Chhattisgarh

Brief :
The AAAR, Chhattisgarh, in the case of Dongarmal Jain, In re [Order No. /STC/CG/AAAR/01/2022 dated April 26, 2024] held that the Rejected/Damaged paddy is one that can't be consumed by human beings as it is not fit for human consumption. Therefore, it would not fall under seed quality and should be placed under HSN 1006 10 90. Further, it is quite clear from the explanation of pre-packaged/labelled food items vis-a-vis S. No. 70 of Notification No. 2/2017-Central Tax (Rate), dated June 28, 2017("the Exemption Notification"), that Rice (Other than pre-packaged labelled) should be of food quality and it must be fit for human consumption for being exempt. In the instant case, "Rejected/Damaged Paddy" fails to fulfil these basic characteristics of being fit for human consumption. As per Assessee, 'rejected/damaged paddy' is to be used in Industrial Usage, and cattle feed. Therefore, 'Rejected/Damaged Paddy' doesn't fall under the Exemption Notification.

Citation :
Order No. /STC/CG/AAAR/01/2022 dated April 26, 2024