Rice Unfit For Human Consumption And Used For Industrial Purposes To Attract 5% Tax, Rules AAR

The Chhattisgarh Authority for Advanced Rulings (AAR) has held that rejected or damaged paddy seeds will attract a 5 per cent GST. It means that rice that is unfit for human consumption and is used for any purpose other than human consumption would not be exempt from goods and services tax (GST).

The AAR said rejected paddy seed that is not fit for human consumption will merit classification under Chapter heading 100610, which attracts five per cent GST.

The ruling comes after Shraddha Traders, which runs a rice mill, sought clarity on the classification and applicability of GST on the sale of rejected paddy seed, which are unfit for human consumption but could be used for industrial purposes like cattle feed production and manure production, among others.

Tax rates under the GST regime are based on their classification under the harmonised system of nomenclature (HSN).

Last week, the GST Council, which is headed by the Union finance minister and comprises representatives of all states and UTs, decided to reduce tax rates on the husk of pulses, including chilka and concentrates, to nil, and on ethyl alcohol to 5 per cent. The GST rate has not been increased on any item during the Council’s 48th meeting, which was conducted via videoconferencing.

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The GST Council also clarified that Rab (rab-salawat) and fryums that are manufactured using the process of extrusion attract GST at the rate of 18 per cent each.

It also said the higher rate of compensation cess of 22 per cent is applicable to motor vehicle fulfilling all four conditions, namely, it is popularly known as SUV, has engine capacity exceeding 1500 cc, length exceeding 4000 mm and a ground clearance of 170 mm or above.

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