The Karnataka bench of the GST Authority of Advance Rulings may have put an end to the debate on whether or not eggs are agricultural produce.
The AAR was approached by SAS Cargo, which transports consignments across India using leased railway containers. It sought clarity on the applicability of Goods and Services Tax (GST) on the transportation of eggs. The AAR said, in view of notification No. 12/2017 dated June 28, 2017, eggs are indeed agricultural produce. Thus, the transportation of eggs will not attract GST.
According to this notification, agricultural produce means any produce out of cultivation of plants and rearing of all life forms (except the rearing of horses), for food, fiber, fuel, raw material, or other similar products. The notification also requires that no further processing should be done on such items. Or, processing done by the cultivator or producer should be such that it does not alter the essential characteristics of the product but makes it more marketable for the primary market.
The GST commissioner whose comments were sought by the AAR was of the view that the intention of the notification appears to be to give relief to farmers who, in addition to cultivation, may undertake certain agro-based activities like animal husbandry, sericulture, etc. Whereas operating a hatchery and production of eggs is a commercial activity.
However, the AAR held that ‘fresh eggs in the shell’, on which no further processing is done, are covered under the definition of agricultural produce. Thus, transportation of eggs by rail from one place in India to another would be exempt.