Processing agricultural produce through de-husking and splitting requires GST registration and 18% tax rate

The AAR, Andhra Pradesh ruled that an applicant engaged in processing agricultural produce through de-husking and splitting of pulses must obtain GST registration and pay tax at 18% (9% CGST + 9% SGST). The authority held that processed pulses fall outside the definition of agricultural produce and are not exempt from GST. Additionally, commission and brokerage services are taxable at 18% regardless of turnover limits, as persons facilitating transactions between buyers and sellers must register and discharge GST obligations irrespective of whether underlying goods are exempt or taxable.

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Issues involved:
The judgment addresses the issues of GST registration and tax liability for a company dealing in brokerage of agricultural produce, specifically focusing on whether the company is required to obtain GST registration, if GST needs to be charged, and the applicable GST rate.

GST Registration Requirement:
The applicant, engaged in brokerage of agricultural produce, sought clarification on the necessity of GST registration due to dealing with exempt agricultural products. The ruling determined that the applicant is indeed liable for GST registration.

Tax Liability and Applicable Rate:
Regarding the tax liability, the judgment highlighted that the applicant must charge GST despite dealing with agricultural produce. The applicable tax rate was specified as CGST at 9% and SGST at 9% based on Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Interpretation of Law and Findings:
The applicant's interpretation of dealing with processed agricultural produce and charging GST at 18% was examined. The ruling clarified that processed pulses do not qualify as agricultural produce exempt from GST. The judgment emphasized that the applicant, acting as a commission agent and collecting brokerage charges, falls under the purview of GST registration and is subject to the tax rates specified under relevant notifications.

Commission and Brokerage Taxation:
The judgment elaborated on the taxation of commission and brokerage income under GST, emphasizing that such income is taxable at 18%. It further outlined that persons involved in facilitating transactions and collecting brokerage charges are required to obtain GST registration and pay CGST and SGST at 9% each, irrespective of the GST status of the goods transacted.

Final Ruling:
In conclusion, the ruling affirmed that the applicant is liable for GST registration, must charge GST on transactions, and the applicable tax rate is CGST at 9% and SGST at 9% as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

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