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Vide Circular No. 19/19/2017-GST dtd. 20.11.2017 taxability of Custom Milling charges for Paddy to Rice has been explained and clarified.
In Chhattisgarh state the Government is procuring Paddy at support price from farmers through various Co-operative Societies. The Paddy so procured is then issued to Rice Mills for custom milling of paddy and Rice is delivered to Government through State Civil Supplies Corporation for sale through Fair Price Public Distribution System.
For Custom Milling the service charges as fixed by the Central Government is paid on which GST is also paid by the Government.
When a rice miller mills additional quantity he is paid Protsahan Rashi (Additional Encouragement Amount) based on quantity milled but the Government is not paying GST on this.
Please guide as to whether this Protsahan Rashi is not liable to GST ? If so kindly share relevant provision / notification.