GST Exemption not available if chemical processing of seeds is done with cleaning, drying, grading to increase shelf life: AAAR

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  • Last Updated on 1 December, 2022

GST Exemption

Case Details: Appellate Authority for Advance Ruling, Telangana Ganga Kaveri Seeds (P.) Ltd., In re - [2022] 145 200 (AAAR-TELANGANA)

Judiciary and Counsel Details

    • Neetu Prasad & B.V. Siva Naga Kumari, Member

Facts of the Case

The appellant was engaged in production and sale of agricultural seeds viz maize, paddy, sunflower, bajra, wheat, cotton, jute, sorghum, mustard etc. It filed an application for advance ruling to determine whether GST exemption would be available on supply of agricultural seeds. The AAR held that the processing done by appellant to turn grain into seed quality goods was different from the processing done by a cultivator or producer of grain for primary market and therefore, exemption would not be available. It filed appeal against the order.


The Appellate Authority for Advance Ruling observed that to qualify as agricultural produce, main condition is that either no processing is done on produce or usual processing is done which does not alter its essential characteristics. The seed will qualify as agricultural produce if activities undertaken are restricted to only cleaning, drying, grading without involving any chemical processing.

However, in the instant case, chemical processing would also be undertaken for better shelf life of seeds apart from only cleaning, drying and grading. Therefore, the exemption would not be available and the ruling of AAR was upheld.

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