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
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