Milling of paddy by rice millers liable to 5% GST: FinMin clarification

Ministry of Finance clarifies that custom milling of paddy by Rice millers for Civil Supplies Corporation is liable to GST and not exempted under Notification No. 12/2017 - Central Tax (Rate), dated June 28, 2017 (Sr. no. 55) and corresponding notifications issued under IGST/UTGST Acts; Explains that, milling of paddy is not an intermediate production process in relation to cultivation of plants, but a process carried out after cultivation is over and paddy harvested; Milling of paddy into rice changes its essential characteristics, further, such process is not usually carried out by cultivators but by rice millers; Accordingly, such process of milling of paddy into rice cannot be considered as intermediate production process in relation to cultivation of plants for food, fibre or agricultural produce envisaged under the Notification; Moreover, such activity shall be liable to GST at rate of 5% pursuant to reduction in rate on services by way of job work in relation to all food and food products falling under Chapter 1 to 22: Finance Ministry Circular