TaxTMI 
TaxTMI 
2019 (10) TMI 615
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.... A.P.M.C. Market, Karnataka, as commission agents. They are registered under the APMC Act & also under the GST Acts. They sell goods on behalf of agriculturist principals (farmers) to the traders, issue invoices to the traders/buyers as prescribed under the APMC Act and also issue sale patties to the agriculturist principals. They collect commission on the services provided to the agriculturist principals from the purchasers and the same is also shown in the invoice issued to the purchasers. 3. In view of the above, the applicant has sought advance ruling in respect of the following questions:- a) Whether the applicant is required to be registered under the GST Act? b) If the answer to the above question is affirmative, then under which section the Commission Agents are to be registered? c) Whether the notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 as amended and Notification No. 9/2017 -Integrated Tax (Rate) dated 28.06.2017 - Serial No. 54(g) issued under section 11 of the CGST Act is applicable to Commission Agents of APMC? d) If the answer to the above question is negative, then to whom does this Notification No.12/2017 - Central Tax (Rate) dated 28.06.....
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....ation under Section 23 of the CGST Act. 4.4 The applicant is of the opinion that they are purely rendering the service of supplying dry chillies (i.e. agricultural produce) on behalf of the farmers to the traders and they are not at all buying and selling any of the goods and hence the applicant cannot be treated as supplying goods rather they can be treated as rendering only the service of supplying agricultural produce on behalf of the farmers to the traders and their nature of activity is not within the scope of supply as mentioned under section 7(1)(c) - Schedule I of No.3(b) due to the following reasons:- (a) The applicant docs not fix the price or consideration for the dry chilli instead the price or consideration is fixed by the traders through the process of tenders and if the farmer is satisfied with the price for his agricultural produce then only the farmer will sell off his agricultural produce and in this price fixation, the commission agent will not have any role to play and for the activity of rendering the above mentioned service, the commission agent will charge only 2% of commission from the trader. (b) The commission agent does not maintain the inventory or ....
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.... The Applicant made reference to the definition of Agricultural Produce which specifies that,- "agricultural produce means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fiber, fuel, raw material or other animal products, on which either no further processing is done or such a processing is done as usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market". The applicant submits that accordingly from the interpretation of the definition of agricultural produce it may be understood that the dry chillies can also be treated as an agricultural produce since the dry chillies are a produce out of cultivation of plants and a further processes such as drying and sun drying is done as is usually done by the cultivator or producer which does not alter its essential characteristics like usage, odour but makes marketable for primary market (i.e. Agricultural Produce Marketing Committee) and Dry Chillies are notified as agricultural produce by the APMC itself. 4.10 The applicant states by referring to the provision of section 11 of the CGS....
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.... made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 6.3 The Applicant seeks advance ruling in respect of the questions mentioned at para 3 supra. The questions are in relation to the requirement of registration under GST Act by the Applicant being the commission agent and the taxability of their activity under GST Acts. We proceed to examine the activities of the applicant and answer the questions in sequential order. It is an admitted fact that the Applicant is a commission agent involved in the business of receipt of dry chillies from the farmers (principals) and supply of the same to the buyers/traders, on behalf of farmers in the Byadgi A.P.M.C. Market, Karnataka. They are registered under the APMC Act & also under the GST Acts. They sell goods (dry chillies) on behalf of principals to the traders, issue invoices to the traders/buyers as prescribed under the APMC Act and also issue sale patties to the principals. They collect commission, on the services provided to the principals, from the purchasers / buyers and the same is also shown in the invoice issued to the purchasers. 6.4 Section 22 of....
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....gent' in terms of para 3 of Schedule I to the CGST Act and also in terms of definition under Section 2(5) of CGST Act 2017. 6.8 The next issue to be decided is whether the applicant is involved in making taxable supply or not. At this juncture the activities of the applicant have been examined and found that the applicant is involved in the following two kinds of supplies.- 1. Supply of goods i.e. dry chillies by the applicant to the trader / purchaser. 2. Supply of services to the farmer (principal) as a commission agent for sale of goods i.e. dry chillies. The supply of goods by the applicant, being commission agent on behalf of the farmer (principal), to the trader / purchaser is a taxable supply in terms the definition as at Section 2(108) of the CGST Act 2017. The goods i.e. dry chillies, are classified under Tariff heading 0904 and are taxable at 5% in terms of SI.No.38 of Schedule I to Notification 01 /2017-Central Tax (Rate) dated 28.06.2017. The applicant has the authority to pass the title of the goods on behalf of the principal to the buyer and also raises the invoice in their own name. Section 23 of the CGST Act 2017 deals with the persons not liable for regi....
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.... dry chillies are produced out of plants and are used for food or as raw materials and is a product obtained by drying the chillies to make it marketable for the primary market and this process does not alter its essential characteristics. Hence dry chillies are covered under the term "agricultural produce". Even the APMC Act considers them as agricultural produce. 6.11 In view of the above, the Applicant is involved in provision of exempted supply of services to the farmers for sale of dry chillies, an agricultural produce, in terms of entry no. 54(g) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. Further a Circular bearing No.57/31 /2018-GST dated 04.09.2018 has been issued by the Central Board of Indirect Taxes and Customs with regard to the scope of principal-agent relationship in the context of Schedule I of the CGST Act 2017. Scenario 4 in para 8 of the circular is relevant to the instant issue and reads as under:- "Scenario 4 Mr. A sells agricultural produce by utilizing the services of Mr. B who is a commission agent as per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr. B identifies the buyers and sells the agricultura....