West Bengal Authority for Advance Ruling (AAR): <\/b>The Bench of <\/b>Sydney D\u2019Silva and Parthasarathi Dey (Members) addressed an application sought on the classification of the services provided in a way of packing of tea bags and rate of GST thereon.<\/p>\n
In the present application, it has been submitted that the process of service undertaken by the applicant (Contract Packer of Tea) involves assembly of materials on machine, including blended tea leaves and other inputs received from the recipient of service<\/b>. Applicant used to classify it as \u201cpackaging service\u201d.<\/b><\/p>\n
Applicant received a communication from Hindustan Unilever Ltd., one of its recipients of services informing that the service should be taxed under Sl No. 26 (f) of the Rate Notification, which applies to \u201cmanufacturing service\u201d.<\/p>\n
The issue to be addressed in this application was \u201cWhether the applicant\u2019s services to HUL are classifiable as packaging service or manufacturing service or both?\u201d<\/b><\/p>\n
The Applicant used to classify it as packaging service under SAC 998540 and charged 18% GST.<\/p>\n
\u201cThe flow chart as mentioned in the \u201cAgreement\u201d between the applicant and HUL, has the processes undertaken at applicants manufacturing unit and shows that the blended tea received from HUL, after quality control procedure, is passed through hoppers, magnetic grill and mesh, and ends with filling tea leaves into the tea bag pouches and stitching. The tea bags are then subjected to quality control before being packed in cartons, wrapped and put into boxes, stored and delivered to HUL after sample testing.\u201d<\/p>\n
In accordance to Section 2(72) of CGST Act,\u00a0<\/span><\/p>\n \u201cManufacture\u201d is the processing of raw materials or inputs in any manner that results in the emergence of a new product <\/i>having a distinct name, character and use.<\/b><\/p>\n Consuming tea contained in a tea bag does not require the tea leaves to be taken out of the bag. The tea bags are porous and filled with tea leaves, therefore, are distinct from tea leaves which excludes them from the category of \u201cpackaging material\u201d.<\/p>\n Thus, it is evident that the applicant\u2019s service to HUL for manufacturing of tea bags is service for manufacturing a product classified under Tariff item 0902 40 40, where physical inputs are owned by the recipient.<\/p>\n Ruling of the Authority:<\/b><\/p>\n Applicant makes a composite supply to Hindustan Unilever Ltd. where the service of manufacturing tea bags from the physical inputs owned by the latter is the principal supply. It is classifiable under SAC 9988 and taxable at 5% rate under Sl No. 26(f) of Notification No. 11\/2017-CT (Rate) dated 28\/06\/2017, as amended from time to time. [Application of Vedika Exports Tea (P) Ltd., In Re, \u00a0Case No. 41 of 2018, dated 10-12-2018]<\/p>\n","protected":false},"excerpt":{"rendered":" West Bengal Authority for Advance Ruling (AAR): The Bench of Sydney D\u2019Silva and Parthasarathi Dey (Members) addressed an application sought on the <\/p>\n","protected":false},"author":8808,"featured_media":194173,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,11],"tags":[31800,6241,34709,31497,34707,34708],"class_list":["post-213153","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-tribunals_commissions_regulatorybodies","tag-classification","tag-gst","tag-hindustan-unilever-limited","tag-manufacturing","tag-packaging","tag-tea-bags"],"yoast_head":"\n