No GST exemption on drilling of borewells and letting out of compressors for pumping of water from bore wells to agricultural fields

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No GST exemption on drilling of bore wells and letting out of compressors for pumping of water from bore wells to agricultural fields

Authority for Advance Rulings, Tamilnadu Aravind Drillers, In re – [2021] 124 taxmann.com 423 (AAR – TAMILNADU)
Short Overview :
The applicant was engaged in providing services of drilling of borewell for supply of water for agricultural operations and letting out of compressors for pumping of water from the bore wells to the agricultural fields mainly to agriculturists engaged in raising of agricultural crops.
It filed an application for advance ruling to determine taxability of services provided by it.
The Authority for Advance Ruling observed that as per entry number 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017, agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing and renting or leasing of agro machinery would be exempt under GST.
However, the applicant did not undertake the ‘operation of irrigation system for agricultural purposes’ and water-well drilling services would be treated as a construction service involving drilling water well and not a support service for agriculture.
Also, the `compressors’ were not agricultural machinery but a General-Purpose Machinery.
Therefore, it was held that no GST exemption would be available on drilling of borewells and letting out of compressors for pumping of water from borewells to agricultural fields.
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