Semen Sorting Services Classified Under SAC 998349, Taxable at 18% GST: Tamil Nadu AAR Rules in Jiva Sciences Case

Background and Nature of the Application

The Tamil Nadu Authority for Advance Ruling (AAR) recently delivered its ruling in the matter of In re Jiva Sciences Private Limited (GST AAR Tamilnadu), addressing three critical questions concerning the GST classification, applicable SAC code, and exemption eligibility of bovine semen sorting services.

The applicant, M/s Jiva Sciences Private Limited, holding GSTIN 33AADCJS5419J1ZL and operating from Shop No. 8, Complex No. 73, Brindavanam Thirumana Mandapam, Mappedu, Tiruvallur – 631402, filed an application for advance ruling under Section 97 of the CGST Act, 2017 and the corresponding provisions of the TNGST Act, 2017. The requisite application fee of Rs. 10,000/- was paid under Sub-rule (1) of Rule 104 of the CGST Rules, 2017 and TNGST Rules, 2017.

Nature of Business Activity

The applicant is engaged in the separation of X and Y chromosome-bearing cells from bovine semen through proprietary technological intervention. This service is rendered to semen stations — entities that manage bull farms and operate semen processing laboratories for the production of unsorted semen doses.

The operational flow is as follows:

  1. Raw semen is collected by semen stations from bulls.
  2. The collected raw semen is handed over to the applicant at the sorting laboratory (situated within the semen station's premises).
  3. The applicant processes the semen using its proprietary technology to segregate X-bearing and Y-bearing sperm cells.
  4. The processed, unpacked material is returned to the semen station for further processing, packing, and conversion into semen straws.

All personnel operating within the sorting laboratory are employees of the applicant. The entire sorting operation is managed and executed by the applicant independently.

Questions Raised Before the Authority

The applicant sought advance ruling on the following three questions:

  1. Whether "Semen Sorting Services" would qualify as an exempt service under GST, similar to the exemption available to semen doses?
  2. Can "Semen Sorting Services" be classified under SAC 9986?
  3. In the absence of a specific notification or classification, under which HSN/SAC code should "Semen Sorting Services" be categorised?

The Authority admitted the application under Section 97(2)(a), (b) and (e) of the CGST/TNGST Acts, 2017, covering classification of goods or services, applicability of notifications, and determination of tax liability respectively.

Applicant's Submissions and Interpretation

The applicant advanced the following interpretations in support of its claim for classification under SAC 9986 and consequent exemption:

  • SAC 9986 is a broad category encompassing support services to agriculture, hunting, forestry, fishing, mining, and utilities, and the applicant argued that semen sorting falls within its scope.
  • The applicant contended that "rearing" in common parlance means breeding and looking after animals, and that since sperm cells are life forms from which bovine animals ultimately emerge, processing and nurturing sperm cells to keep them healthy and fit for fertilisation amounts to "rearing of life forms."
  • It was further submitted that semen sorting is an intermediate step in the overall production of semen doses, and the animals are eventually reared for milk — a food product and raw material — thereby connecting semen sorting to the agricultural value chain.
  • Alternatively, the applicant suggested possible classification under SAC 998612, covering "Animal Husbandry Services", taxable at 18% GST.

Gujarat AAR Ruling Cited