Supply Of Services For Plantation Of Mangrove Seeds And Seedlings In Coastal Areas Attracts 18% GST: AAR

The West Bengal Authority of Advance Ruling (AAR) has held that the supply of services for the plantation of mangrove seeds and seedlings in coastal areas would attract 18% GST.The two-member bench of Brajesh Kumar Singh and Joyjit Banik observed that no GST is payable on the supply of services for cultivation, planting and nurturing of fruit trees. The applicant is in the business of cultivation, planting and nurturing of fruit trees in marginalised areas and mangrove seeds and seedlings in coastal areas across different states of the country with the sole aim of environmental protection against climate change. The applicant performs the activities in accordance with contracts awarded by internationally renowned environmental organizations. The applicant has sought an advance ruling in respect of SAC Code and GST Rate for the outward supply made by the applicant, in the case of fruit trees being cultivated and nurtured in marginalised communities. Yet another issue raised was in respect of SAC Code & GST Rate for the outward supply made by the applicant, in the case of mangroves being cultivated and nurtured in coastal communities. The applicant claimed that while aiming to enhance biodiversity and re-establish ecosystem function to protect the islands and the populace from erosion by way of planting of mangrove seeds and seedlings, he also aims to create sustainable livelihoods and provide nutritious food to the families and community residing in the nearby planting activities. The applicant submits that the Supreme Court has elaborately explained what constitutes the term "agriculture" in depth in the case of CIT v. Raja Benoy Kumar Sahas Roy. It is a landmark case for the understanding of the term "agriculture" under the Income Tax Act. The judgement makes it clear that the term "agriculture" is cultural, i.e., cultivation of the agar, i.e., field or land. Raising a product through the use of human skill and labour on land may be classified as an agricultural activity. The product should have some utility, either for consumption or for trade and commerce. The term "agriculture" receives a wider interpretation both with regard to its operations as well as the results of such operations. The department contended that the service provided for other environmental protection services nowhere else classified will fall under chapter sub-heading 999490 and will attract 18% GST. The AAR, while agreeing with the contention of the department, stated that the applicant doesn't provide services for food, fibre, fuel, raw materials, or other similar products or agricultural produce. Rather, the sole object of the services, as it has been claimed by the applicant, is to enhance biodiversity and re-establish ecosystem function to protect the islands and the populace from erosion. "We are therefore of the opinion that such supplies of services may be treated as environmental protection services under chapter heading 9994 and shall not be covered under chapter heading 9986, being support services to agriculture, forestry, fishing, and animal husbandry," the AAR said. Applicant's Name: Raj Mohan Seshamani Dated: 18.08.2022 Click Here To Read/Download Order

Supply Of Services For Plantation Of Mangrove Seeds And Seedlings In Coastal Areas Attracts 18% GST: AAR

Mariya Paliwala

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