2018 (11) TMI 399 – AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH – TMI – Levy of GST – sale of tobacco leaves received from farmers made by Commission Agent in an auction – turnover is less than ₹ 20 Lakh – liability to pay GST – Reverse charge mechanism – liability to pay GST when commission agent sell the tobacco leaves received from trader in an auction – Commission Agent receives tobacco from farmers and sell them within the state – value of a supply of goods and/or services.
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Held that:- The services provided by a commission agent for sale or purchase of agricultural produce is having NIL rate of GST – Undoubtedly, tobacco leaves are agricultural produce and therefore, a commission agent dealing in sale and purchase of tobacco leaves shall be exempted from GST.
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The above NIL rate of GST on services provided by a commission agent for sale and purchase of agricultural produce is irrespective of who is the principal i.e. whether it is a farmer or a trader. As long a
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acco from farmers and sell them within the state – Held that:- As the above service is exempt from tax by the entry No:24 of Notification No: 11/2017-Central Tax(Rate). hence. the commission agent is not liable to collect GST. – AAR/AP/03(GST)/2018 In Application No. 06/AAR/GST/2018 Dated:- 8-6-2018 – SRI. J.V.M SARMA AND SRI. AMARESH KUMAR, MEMBER Present for the Applicant: Sri Vallabhaneni Mohan Rao, Present for the Jurisdictional Officer: Remarks Received Note: Under Section 100 of the APGST Act 2017, an appeal against this ruling lies before the appellate authority for advance ruling constituted under section 99 of APGST Act 2017, within a period of 30 days from the date of service of this order. 1. M/s. JAYALAKSHMI TOBACCO COMPANY, (hereinafter also referred as an applicant), having GSTIN:37B1WPS7726L1Z2 are commission agents dealing with tobacco leaves. The applicant has various business activities, such as procuring tobacco leaves from farmers as well as from traders and acting
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he application has been forwarded to both the jurisdictional officers (State Tax & Central Tax) to offer their remarks as per the Sec. 98(1) of CGST / APGST Act 2017, and requested for their remarks and also for relevant records. In response, the jurisdictional officer i.e Assistant Commissioner(ST), Indrakeeladri Circle, No. I Division, Vijayawada offered their remarks through an e-Mail, dated : 29th March 2018. In their remarks the jurisdictional officer stated that, there is no proceedings passed by the authority and no proceeding pending before any authority/forum relating to the applicant. 4. Based on the remarks received from the jurisdictional officer, this authority feels necessary to hear the applicant for admitting the application and to pronounce the advance ruling. Accordingly, a personal hearing was fixed on 04.04.2018. In response to the notice, Sri.Vallabhaneni Mohana Rao, authorized representative on behalf of the applicant, had attended and made oral submissions, a
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der issued accordingly ORDER. After having several deliberations basing on the material on record, the members of this authority expressed different views on the issues raised by the applicant and found no consensus to pronounce any ruling. As per sub-section 2 of section 98, CGST/APGST Act,2017, this authority is referring this application to the Appellate Authority for further action on the issues raised by the applicant. Hence, to be treated as ruling is not issued on this application. Accordingly the application disposed off. Findings of the State Member : 1. M/s. JAYALAKSHMI TOBACCO COMPANY, (hereinafter also referred as an applicant), having GSTIN:37BIWPS7726L1Z2 are commission agents dealing with tobacco leaves. The applicant has various business activities, such as procuring tobacco leaves from farmers as well as from traders and acting either as commission agent or as seller as the case may be. 2. The applicant has filed an application in Form GST ARA-01, dated 14.03.2018, for
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called, who carries on the business of supply or receipt of goods or services or both on behalf of another; Section 2(6) aggregate turnover means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess; Sec. 24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise; Section 7(1) For the purposes of this Act, the expression supply includes:- (c) the activities specified in Schedule I, made or agreed to be made without a co
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Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply: and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation.-For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. After due verification of the material on
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er S.No. 3 of Notification 04/2017 – Central Tax (Rate), Dated :28th June 2017, Reverse Charge is applicable on tobacco leaves on receipt of the goods. by a registered person from agriculturist. Issue. No.4 Who has to pay GST when commission agent sell the tobacco leaves received from trader in an auction? Can commission agent collect GST from buyers and pay or not? Ruling : The transaction referred to in falls under acting as an agent on behalf of other taxable persons, who makes taxable supply of goods as an agent. As per clause VII of Section 24 of CGST/ APGST Act 2017, the Commission Agent has to get registered under the Act and has to pay GST when sell the tobacco leaves received from trader in an auction, and can collect GST from buyers. Issue.No.5 The Commission Agent receives tobacco from farmers and sell them within the state. He takes commission from farmers for his services and it is less than ₹ 20 Lakh in a year. Will the commission Agent is liable to collect GST in t
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r receives tobacco from farmers and traders and sell them in an auction and takes commission his services. The applicant has raised following questions before the Authority for Advance Ruling: 1. Will GST be applicable on sale of tobacco leaves received from farmers made by Commission Agent in an auction and his turnover is less than ₹ 20 Lakh? 2. In case, there is GST in the above situation, who has to pay the tax? 3. Will reverse charge provisions applicable for tobacco leaves or not? 4. Who has to pay GST when commission agent sell the tobacco leaves received from trader in an auction? Can commission agent collect GST from buyers and pay or not? 5. The Commission Agent receives tobacco from farmers and sell them within the state. He takes commission from farmers for his services and it is less than ₹ 20 Lakh in a year. Will the Commission Agent is liable to collect GST in this situation? 2.1 I have gone through the facts of the case as given by the applicant i.e. the app
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harvesting, threshing, plant protection or testing; (b) supply of farm labour; (c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (e) loading, unloading, packing, storage or warehousing of agricultural produce; (f) agricultural extension services; (g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce. 2.2 As seen from above, services provided by a commission agent for sale or purchase of agricultural produce is having NIL rate of GST. Further the definition of agricultural produce a
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e referred Notification. 3. It would be pertinent for me discuss another entry in the same Notification 11/2017-Central Tax (Rate), dated 23.06.2017. Sl.No. 5 having 9% rate of CGST (18% GST). The same reads as: Services in wholesale trade. Explanation-This service does not include sale or purchase of goods but includes: Services of commission agents, commodity brokers, and auctioneers and all other traders who negotiate whole sale commercial transactions between buyers and sellers, for a fee or commission Services of electronic whole sale agents and brokers, Services of whole sale auctioning houses. I find that Sl.No. 5 of referred Notification is for services of Commission agents. which is peged at 18% GST (9+9). However, applicant being a Commission Agent dealing in sale and purchase of agricultural produce (tobacco leaves), I find Sl.No. 24 of the Notification having NIL rate of Tax is applicable on them. 4. AS far as Registration is concerned, Section 23 of CGST Act stipulates tha
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