Commission agent services for agricultural produce held as exempt support services to agriculture, including storage and sale facilitation.
A commission agent facilitating the sale and purchase of turmeric agricultural produce in a regulated primary market, including storage, weighment and remittance of sale proceeds, was treated as providing services on behalf of the agriculturist. Applying the statutory definition of commission agent and the exemption for support services to agriculture under Notification No. 11/2017-Central Tax (Rate), the activity was held to fall within the exempt category. The commission structure and bye-laws showed that the charges covered incidental marketing services connected with agricultural produce, so the supply was not taxable and attracted NIL CGST and SGST.
Issues: Whether the services rendered by commission agents in relation to the sale and purchase of turmeric agricultural produce, including storage, weighment and facilitation of sale, are taxable or fall under the exempt support services to agriculture.
Analysis: The activity was examined in the light of the statutory definition of commission agent under the Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987, the licensing framework for market committees, and the exemption entry for support services to agriculture under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The documents showed that the agent stored the produce, facilitated the sale in the regulated primary market, collected the buyer's payment, deducted commission, and remitted the balance to the agriculturist. The charging structure and the bye-laws also showed that the commission covered storage and incidental services connected with marketing of agricultural produce. These activities were held to be services provided by a commission agent for sale or purchase of agricultural produce and thus fell within the exempt entry.
Conclusion: The services were held to be support services to agriculture under Heading 9986 and were taxable at NIL rate of CGST and SGST.
Final Conclusion: The applicant's commission-agent activity for turmeric agricultural produce was treated as an exempt agricultural support service and not as a taxable supply.
Ratio Decidendi: Where a commission agent in a regulated agricultural market merely facilitates the sale of agricultural produce, including storage and allied incidental services, and acts on behalf of the agriculturist in the primary market, the service falls within the exempt category of support services to agriculture.
TaxTMI 
AI Drafter ✕
TaxTMI 
