GST Exempted On Services Of Milling Of Food Grains Into Flour To Govt. Of West Bengal For PDS: AAR

The West Bengal Authority of Advance Ruling (AAR) has ruled that services by way of milling food grains into flour (atta) and supplying it to the Food & Supplies Department, Govt. of West Bengal, for distribution under the Public Distribution System, are eligible for GST exemption.

The two-member bench of Brajesh Kumar Singh and Joyjit Banik has observed that the composite supply of services by way of milling of wheat into flour (atta) to the West Bengal government for distribution of flour under the Public Distribution System is eligible for exemption as the value of goods involved in such a composite supply does not exceed 25% of the value of the supply.

The applicant is a flour miller. The applicant entered into an agreement with the State of West Bengal, represented by the District Controller of Food and Supplies. The agreement pertains to the conversion of wheat provided by the state government and owned by the state government at all times into atta or fortified atta for distribution by the state government through the public distribution system.

The applicant has sought an advance ruling on the issue of the rate of tax applicable on the value of supply.

The AAR noted that the applicant receives Rs. 10 and Rs. 50, i.e., Rs. 60 in total, against fortification costs and packing charges, respectively, for the crushing of 100 kg of wheat, which involves the supply of goods.

The AAR found that the value of goods involved in the instant supply stands at Rs. 60/- against the total value of supply of Rs. 260.48, and the value of goods involved in the composite supply stands at 23.03 percent of the total value of supply, i.e., it does not exceed 25% of the value of the composite supply.

Applicant’s Name: Somnath Flour Mills

Date: 09.02.2023

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