GST Liability for Tobacco: Clarification on Exemption and Reverse Charge Provisions

The case involved a commission agent seeking an advance ruling on GST liability for dealing with tobacco leaves. The State Member determined that GST is not applicable if turnover remains below a specified threshold. The Central Member referred to a notification exempting commission agents dealing with agricultural produce like tobacco from duty. As a result, the issue of liability to pay tax did not arise. The State Member noted reverse charge provisions for tobacco leaves, while the Central Member stated the provision was not yet notified. Ultimately, the appeal was dismissed following the applicant's cancellation of GST registration, as the ruling only bound the applicant and jurisdictional authority.

---

---

Issues:
1) Applicability of GST on sale of tobacco leaves received from farmers by Commission Agent with turnover less than Rs. 20 lakhs.
2) Liability to pay tax in case of GST applicability.
3) Applicability of reverse charge provisions for tobacco leaves.
4) GST payment responsibility when commission agent sells tobacco leaves received from trader in an auction.
5) GST liability for commission agent receiving tobacco from farmers and selling within the state with a commission less than Rs. 20 lakhs.

Analysis:
1) The applicant, a commission agent dealing with tobacco leaves, sought an advance ruling on the GST liability for certain business activities. The State Member opined that GST is not applicable if the aggregate turnover, including the value of tobacco leaves and commission, does not exceed Rs. 20 lakhs. The Central Member referred to a notification stating that commission agents dealing with agriculture produce like tobacco attract a 'Nil' rate of duty.

2) Regarding the party liable to pay tax in case of GST applicability, both the State and Central Members deemed this issue not applicable based on the first issue's resolution.

3) On the question of reverse charge provisions for tobacco leaves, the State Member indicated that reverse charge is applicable as per a specific notification, while the Central Member noted that the provision had not been notified yet.

4) When discussing the responsibility for GST payment when a commission agent sells tobacco leaves received from a trader in an auction, the State Member highlighted that the agent must register under the Act, pay GST, and can collect GST from buyers. The Central Member reiterated that the activity falls under an exemption from GST based on the first issue.

5) Lastly, in the scenario where a commission agent receives tobacco from farmers, sells within the state, and takes commission less than Rs. 20 lakhs, the State Member explained that registration and GST collection are not required if the turnover remains below the threshold. The Central Member concurred, stating that since the service is exempt from tax, the commission agent is not liable to collect GST.

In conclusion, due to the applicant's subsequent cancellation of GST registration, the Appellate Authority for Advance Ruling dismissed the appeal as the ruling was binding only on the applicant and the jurisdictional authority, leading to the appeal being disposed of.

---