DGGI Investigations on Flour Mills; GST Implications and Way Forward

In view of the investigations initiated by the DGGI on various Flour mills operating under Public Distribution in the State of West Bengal during the last year, Taxmann’s Research & Advisory (Indirect Tax) Team analysed the taxability issue of Flour Mills operating under Public Distribution System (‘PDS scheme’) in the State of West Bengal. This analysis would also be relevant for Flour Mills operating in other States as generally the PDS scheme operates in similar way in other States as well. The analysis covers the following:

1. Nature of activity carried out by the Flour Mills operating under the PDS scheme

2. Value of supply especially considering the treatment of Gunny Bags and By-products

3. Exemption available to the said Flour Mills under GST regime

4. GST Rate on impugned services (where exemption is not available)

5. Suggestive way forward for the Flour Mills operating under PDS Scheme

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