Guwahati: Guwahati Tea Warehousing Association (GTWA) has challenged the Centre’s decision not to consider processed tea as an agricultural produce, which denies it exemption from Goods and Services Tax (GST), in Gauhati High Court.
The department of revenue, under the Union finance ministry, had issued a clarification on November 15 2017, that processed tea, including black and white teas, falls outside the definition of agricultural produce given in notifications issued under the Integrated Goods and Services Tax and Union Territories Goods and Services Tax Acts. Therefore, exemption from GST is not available to their loading, packing and warehousing.
A bench of Justice Manash Ranjan Pathak admitted the writ petition and issued notices to the respondents to furnish their replies by June 20.
The Union government, represented by the secretary of department of revenue under the ministry of finance, the state of Assam represented by the principal secretary of the department of agriculture, the commissioner of GST in Guwahati and the GST Council in New Delhi, have been made respondents in the case.
On behalf of GTWA, its general secretary Manoj Kumar Surana filed the petition. The petitioner was represented by advocates M.L. Gope, Nitu Hawelia and others.
Assistant solicitor general Subhash Chandra Kayal and state government advocate R.B. Bora accepted the notices for the respondents.
“Payment towards GST made by the petitioner’s association in terms of the impugned clarification shall be subject to the outcome of this writ petition,” the high court said in its interim order.
The petitioner has contended in the court that the Supreme Court, in other cases, has held that tea is an “agricultural produce” for which such tax is not applicable.
The apex court, in an earlier order, had upheld the decision of Allahabad High Court that “processed tea” is an “agricultural produce”.
Under GST, agricultural produce is defined as any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market.
The government’s contention is that tea used for making the beverage, such as black and white tea, is a processed product made in tea factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation and packing on green leaf and is the processed output of the same. Thus it is not eligible for exemption available for loading, unloading, packing, storage or warehousing of agricultural produce.