Service tax on C&F Commission

[RAMA KRISHNA KNVS]

Dear Experts

Plz clarify me on the following.

Our company manufactures and sells  Seeds in all states. in every state we have C&F agent to handle the seeds stock. He will handle our stock, raise invoices on our behalf to dealers. for that we pay commission of 4% on net sales. Now i have the following queries.

1. can we consider the seeds as agricultural produce
2. can we avail the benefit of negative list under finance act  - 'Service tax on selling commission payable for selling agricultural produce'  (to escape service tax on commission to C&F Agent)

Ramakrishna

AI Summary

Company Questions If Seeds Qualify as Agricultural Produce for Service Tax Exemption Under Finance Act A company involved in manufacturing and selling seeds across various states queries whether seeds qualify as agricultural produce to benefit from the negative list under the Finance Act, thereby exempting them from service tax on commission paid to C&F agents. One respondent questions if seeds can be classified as agricultural produce, while another explains that agricultural produce refers to products that undergo minimal processing without altering their essential characteristics. The original poster argues that seeds should be considered agricultural produce as they are farm-produced, despite not being directly consumed by humans.