Do the pic-up charges paid to the Owner/Driver fall under GST rate of 5%?

ADVANCE RULING NO. GUJ/GAAR/R/15/2021
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2020/AR/48)
Date: 27.01.2021
B R I E F FA C T S

The applicant M/s. Aristo Bullion pvt.ltd., R.B.Chamber, B/3. Chanla Ole, Manek Chowk, Ahmedabad-380001 has submitted that they recently registered as a private limited company with effect from 25.07.2020 for which Certificate of Incorporation is issued by the Registrar of Companies; that they intend to engage in supply of Gold (including Gold Plated with Platinum) unwrought or in semi-manufactured forms or in powder form, based metal clad with silver, not further worked than semi-manufactured, coin etc; that it involves some manufacturing process also and in the said activities various inputs viz. Gold dore, silver dore are required; that the said inputs will be procured domestically on payment of GST at appropriate rate; that sometimes the applicant may import raw materials/inputs from overseas market and will be discharging applicable duty and tax including IGST; that the input tax credit has to be availed in terms of Section 16 of the CGST Act, 2017 and Rules made thereunder; that they will also avail input tax credit of GST paid on the goods procured domestically as well as from overseas market and the applicant will have to discharge GST on their outward supplies at applicable rate; that the said taxes will be discharged through Electronic Credit Ledger as well as through Electronic Cash Ledger in the case if balance available in Electronic Credit Ledger is not adequate.

2. The applicant has submitted that they also intend to procure Castor oil seeds directly from the Agriculturists who produce the same in their farms and after procuring the said Castor oil seeds they intend to supply in the Domestic market as well as intend to export the same; that as per their understanding, as of now “Agriculturists” are not required to obtain registration under Section 23 of the CGST Act, 2017; that ‘Castor oil seeds’ is also not covered in the Notification No.4/2017-Central Tax issued under Section 9(4) of the CGST Act, 2017 as amended from time to time as is evident from the following table

3. The applicant has further submitted that as of now, the provisions of Section 9(4) of the CGST Act, 2017 and Section 5(4) of the IGST Act, 2017 are not operative attracting GST on the supply of goods received by the Registered person from the unregistered person, hence the Castor oil seeds procured from unregistered person will not attract GST in the hands of the recipient of supply at the receipt stage; that therefore the procurement of Castor oil seeds from the agriculturists who are unregistered is not liable to GST either in the hands of the Agriculturists under Section 9(1) of CGST Act, 2017 or in the hands of Recipient of the Castor oil seeds procured from the unregistered person under Section 9(4) of the CGST Act, 2017, hence the question of availing input tax credit does not arise on such purchase; that as mentioned in the preceding para, the applicant intends to trade in Castor oil seeds (HSN Code 1207) and it is the applicant’s understanding that they are not falling under the exempted category and hence they are therefore liable to discharge GST in terms of Section 9(1) of the CGST Act, 2017 read with Notification No.01/2017-Central Tax(Rate), in terms of Schedule-I, Sr.No.70 of Notification No.01/2017-Integrated Tax(Rate) for Inter-state supply @5%; that the said notification does not stipulate that tax so payable is without input tax credit; that in other words when the applicant procures Castor oil seeds it does not attract GST; that however, it attracts GST when it is supplied by the applicant; that simultaneously, the applicant is having input tax credit earned on the inward supply viz. Gold meant for manufacture and its supply gold semi-finished silver etc.

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