Question-Mr. A is registered person in GST. He is having a manufacturing enterprise. Along with the manufacturing enterprise, he is also having an agriculture land on which he is growing agriculture produce. The goods are taxable in GST by virtue of notification No. 1/2017-Central Tax (Rate) Dated 28th June 2017 (as amended from time to time).
The moot question is whether such person is required to charge tax on such sale of agriculture produce or whether he enjoys exemption on sale of such agriculture produce since he is an agriculturist.
Answer-Let’s try to analyse the above scenario firstly by virtue of Section 23 and then by virtue of Section 9 and Section 11 of CGST Act, 2017-
Section 23(1)(b) of CGST Act, 2017-Exemption from Registration to an Agriculturist-
At the outset, lets first refer to Section 23(1)(b) of CGST Act, which is being reproduced herewith-
Persons not liable for registration. — (1) The following persons shall not be liable to registration, namely: ––
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
The above provision provides that an agriculturist would not be liable for registration to the extent of supply of produce out of cultivation of land. However, if agriculturist is already a registered person on account of making other taxable supplies, then in such case applicability of section 23 cease to have effect and he becomes a registered person under GST and all provisions of GST Act are applicable upon him as they are applicable on any other person.
Taxability of Supply of Agriculture produce sold by Mr. A
Now in the above situation, Mr. A is already registered in GST and is making supply of agriculture produce which is taxable as per Notification No. 1/2017-Central Tax (Rate) Dated 28th June 2017 (as amended from time to time).
The question is now once Mr. A is already registered in GST and Section 23(1)(b) ceases to have any applicability on the given scenario, whether Mr. A would be required to levy tax on the supply of agriculture produce. The answer lies in the fact that once a person is registered in GST, then exemption from levy of tax can only be given under Section 11 of CGST Act, 2017 and there is no such exemption given in Section 11 of CGST Act, 2017 to a registered person supplying agriculture produce which is taxable in GST, even though he might be an agriculturist.
Conclusion-Therefore, since Mr. A is registered in GST, thus even though he might be an agriculturist but still he would be liable to charge tax on supply of taxable agriculture produce. He cannot claim exemption from levy of tax by virtue of provisions of Section 23(1)(b) of CGST Act, 2017 since the same are registration provisions and they ceases to have applicability once a person is registered in GST and further there is no exemption notification issued in Section 11 of CGST Act from levy of tax for an agriculturist who is a registered person in GST.