Company providing agricultural commodity brokerage services doesn't qualify for GST exemption under Notification 12/2017 /2017

AAR Haryana ruled that a company providing brokerage services for agricultural commodity trading does not qualify for GST exemption under Notification 12/2017. The applicant facilitated wheat, maize, and pulses transactions by connecting buyers and sellers while charging brokerage from both parties. The authority determined the applicant functions as an intermediary under IGST Act rather than a commission agent, as it merely facilitates trades without dealing in goods directly. Since the exemption specifically covers commission agents for agricultural produce sales, the applicant's services remain taxable under GST.

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Issues Involved:
Whether the services of the applicant are exempt under the exemption notification 12/2017 (CT Rate) dated 28.06.2017.

Analysis:
The applicant, a private limited company, provides brokerage/intermediary services for the sale and purchase of agricultural produce. The company sources buyers and sellers and charges brokerage from both parties. The main commodities dealt with are wheat, maize, and pulses. The applicant sought a ruling on whether their services fall under the exemption notification 12/2017 for services provided by a commission agent for sale or purchase of agricultural produce.

The applicant argued that they are not acting as agents but as intermediaries facilitating transactions without dealing with the goods themselves. They claimed that their services are not related to the cultivation of plants but merely aid in purchase and sales transactions. The applicant believed that they were liable to charge tax as their services were not covered by the exemption notification.

The discussion highlighted the definitions of agent and intermediary under the CGST Act and IGST Act. The definition of agricultural produce and the circular on Principal-Agent relationship were referenced. The applicant's role was compared to a scenario where a procurement agent does not involve in the supply or receipt of goods directly. It was concluded that the applicant, not being a commission agent, did not fall under the exemption for services by a commission agent for sale or purchase of agricultural produce.

Ruling:
The ruling stated that the services provided by the applicant are not exempt under the exemption notification 12/2017 CT (Rate) dated 28.06.2017. The decision was made accordingly and to be communicated to the applicant.

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