TaxTMI 
TaxTMI 
2022 (6) TMI 272
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....r referred to as "Appellant") against the Advance Ruling No. GST-ARA-108/2019-20/B-115 dated 22.12.2021, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). BRIEF FACTS OF THE CASE Brief details of the activity relating to questions raised by the Appellant 3.1 Nitin Bapusaheb Patil, Proprietor of M/s. N. B. Patil, (hereinafter referred to as the Appellant) is a registered person under the CGST Act, 2017, having GST1N 27ABPPP6076P1ZK for supplying services as a 'Commission Agent' to farmers in Agricultural Produce and Marketing Committee, Sangli, Maharashtra (APMC Sangli). 3.2 The Appellant, as a 'Commission Agent', renders his services to farmers in relation to supply of turmeric (whole turmeric, not in powder form) to traders in APMC, Sangli. The Appellant is also engaged in selling the turmeric on his own as the 'trader'. 3.3 The Appellant is registered as a 'commission agent' and also as 'trader' under the provisions of the Maharashtra Agricultural Produce and Marketing (Development and Regulation) Act, 1963 (The APMC Act), the Maharashtra Agricultural Produce and Marketing (Regulation) Rules, 1967 (The APMC Rules) and t....
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....er) and answered the questions as under:- (a) Dried and Polished Turmeric, as in the instant case, is not covered under the definition of 'Agriculture Produce 'and is not exempted from GST. The HSN code of the impugned product is 0910 30 20 and the rate of GST is 5% (2.5% each of CGST and SGST). (b) The impugned services rendered by the applicant are taxable under GST and not exempt in terms of SI. 54 Heading 9986 of Notification No. 12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017. (c) The applicant is required to be registered under the relevant provisions of the CGST Act, 2017 for his impugned activities. 3.10 The Appellant, being aggrieved by the impugned MAAR Order, has filed the present appeal. Regarding delay in filing this Appeal 3.11 The Appellant submits that the MAAR Order has been passed on 22.12.2021. In terms of section 100 (2) of the CGST Act, the period of limitation for filing the appeal against the Advance Ruling Order before the Appellate Authority for Advance Ruling is 30 days from the date of communication of the AR Order. Thus, in consideration of above, the Appella....
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....il soft before drying. The fresh turmeric is boiled in a movable boiler by farmers at their farmland. Boiling destroys the vitality of fresh turmeric, avoids the raw odour, reduces the drying time and yields uniformly coloured product. iv Boiled turmeric is spread in the natural sun light for drying purpose by the farmers in the farmland only. v As the colour of the processed turmeric influences the price of the produce, the farmers also carryout polishing of the turmeric. Dried turmeric has poor appearance and rough dull outer surface with scales and root bits. Polishing of dried turmeric also helps in removing the wrinkles and skin. The appearance is improved by smoothening and polishing the outer surface by manual or mechanical rubbing. The polishing consists of rubbing the dried turmeric fingers on a hard surface. vi Generally, the polishing is done by farmers themselves with moveable polish machines using a rotating drum mounted on an axel of farm tractor. When the drum filled with turmeric is rotated with the help of farm tractor, polishing is effected by abrasion of the surface against each other as they roll inside the drum. vii Farmers g....
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....) "agent" means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another; 2(7) "agriculturist" means an individual or a Hindu Undivided Family who undertakes cultivation of land:- (a) by own labour, or (b) by the labour of family, or (c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family; 2(105) "supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied; 2(107) "taxable person" means a person who is registered or liable to be registered under section 22 or section 24; Section 9. Levy and collection.- (1) Subject to the provisions of sub-section (2), there shall be levied a tar called the central goods and services tax on all intra-State supplies of ....
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....'agricultural produce the meaning of the said term is also explained below the said notifications. Relevant entry of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 is extracted below: SI.No. Chapter, Section, Heading, Group or Service Code(Tariff) Description of Service Rate (per cent.) Condition 54 Heading 9986 Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of (a).......... To (e) ........... (g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce. ............ ............ ............ Nil Nil Definitions. - For the purposes of this notification, unless the context otherwise requires,- (d) "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, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing ....
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.... these processes are carried out by farmers only.- (i) Affidavit dated 18.01.2022 executed by one of the local farmers stating that various processes such as boiling, drying and polishing of fresh harvested turmeric are carried out by farmers in their farms to make the turmeric marketable. (ii) Letter dated 05.01.2022 issued by the Halad Saunshodhan Yojana, Krishi Saunshodhan Kendra Digraj, Sangli working under the Mahatma Phule Krishi Vidyapeet, Rahuri stating that various processes such as boiling, drying and polishing of fresh harvested turmeric are carried out by farmers on their farms to make the turmeric marketable. (iii) Letter dated 01.02.2022 issued by APMC Vasmat, Higoli stating that various processes such as boiling, drying and polishing of fresh harvested turmeric are carried out by farmers before bringing to APMC markets to get best prices. (Exhibit -1) 4.12 It is also important that the definition of 'agricultural produce' also mentions that such processing is done as is 'usually' done by a cultivator or producer. The term "usually" denotes 'ordinary' or 'normal' practice followed by farmers. 4.13 As a normal and ordinary practice, far....
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....ility and appearance of the turmeric. However, the essential characteristic of the turmeric continues in dried turmeric. 4.19 In this connection, the Appellant produces copies of the test reports of 'fresh turmeric' and 'dried turmeric' as Exhibit. It will be observed that essential characteristics of turmeric in fresh form and dried processed form are same. Only difference is in increase of components due to reduction in moisture. Therefore, the processing of fresh turmeric into dry turmeric by farmers does not alter the essential characteristics of the turmeric. Such processing is carried out to make the produce marketable for primary market: 4.20 It is reiterated that normally the turmeric in fresh harvested form is not sold by the farmers. Therefore, various processes are carried out by farmers to make the turmeric sustainable, and to improve its appearance, to make it marketable. 4.21 Normally, farmers do not sell the turmeric directly to traders in wholesale markets located in cities. Fanners mostly sell the turmeric to traders through commission agents in nearby APMC Markets. 4.22 In view of above, it is clear that the sale of such turmeric as processed by far....
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.... S. No. 1 Comments 7. In view of the above, it is hereby clarified that processed products such as tea (i.e., black tea, white tea etc.), processed coffee beans or powder, pulses (dehusked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts etc. fall outside the definition of agricultural produce given in notification No. 11/2017C.T. (Rate) and 12/2017-C.T. 4.25 The Appellant submits that the reliance placed by the MAAR on the said circular is unwarranted and misplaced on account of following reasons: - Firstly, there is no specific and direct reference of the turmeric in the clarification. - Secondly, the term 'processed spices' does not consider difference between processes carried out by farmers and those carried out by others such as traders/industries. - Thirdly, the question for clarification was warehousing services and not commission agent services. - Lastly, as the issue was relating to warehousing all items under clarification appears to have been processed subsequently post sale by farmers or commission agents, i.e., appears to have been found processed by industrialists and not by....
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....mers (i.e., GST on supply of goods). 4.30 The Appellant has already submitted grounds in detail on the first aspect that how services as a commission agent (i.e., supply of services) relating to sale and purchase of turmeric are covered as services relating to 'agricultural produce' and thereby exempt from the GST. Hence the same are not discussed again. 4.31 As there is no clarity and the answer is ambiguous (in fact the answer itself is not given) on the second aspect of GST liability of the Appellant for supply of turmeric (i.e., supply of goods) on behalf of farmers, the very purpose of the Advance Ruling itself has been defeated. 4.32 Therefore, the Appellant hereby reiterates and resubmits the understanding how the Appellant is not required to get registered under the CGST Act with respect to supply of turmeric (i.e., the aspect of supply of goods) as detailed below. 4.33 The charge of GST has been created in terms of section 9 of the CGST Act and the same shall be paid by the 'taxable person'. Whereas, in terms of section 2 (107) of the CGST Act, a "taxable person" means a person who is registered or liable to be registered under section 22 or section 24 of the C....
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.... would be relevant in the present context as extracted below. Section 24. Compulsory registration in certain cases.- Notwithstanding anything contained in sub-section (1) of section 22 the following categories of persons shall be required to be registered under this Act,- ........ ........ ....... (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise; ....... ......... ......... (Emphasis supplied) 4.40 As the section 24 of the CGST Act contains non-obstante clause (i.e., Notwithstanding anything contained in sub-section (1) of section 22), these provisions are having overriding effect over provisions of section 22(1) of the CGST Act. Therefore, the requirement of GST registration by such specified persons including agent will be governed under provisions of section 24 of the CGST Act and not under section 22(1) of the CGST Act. 4.41 As the GST registration for agent has been specifically covered under section 24(vii) of the CGST Act, saying it already covered under section 22(1) of the CGST Act would make the provisions of section 24(vii) of the CG....
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....ard or services provided by the commission agents for sale or purchase of agricultural produce "from GST. Thus, the 'services 'provided by the commission agent for sale or purchase of agricultural produce is exempted. Such commission agents (even when they qualify as agent under Schedule-I) are not liable to be registered according to sub-clause (a) of sub-section (1) of section 23 of the CGST Act, if the supply of the agricultural produce, and/or other goods or services supplied by them are not liable to tax or wholly exempt under GST [Further, according to clause (vii) of section 24 of the CGST Act, a person is liable for mandatory registration if he makes taxable supply of goods or services or both on behalf of other taxable persons. Accordingly, the requirement of compulsory registration for commission agent, under the said clause shall arise when both the following conditions are satisfied, namely:- a) the principal should be a taxable person; and b) the supplies made by the commission agent should be taxable. Generally, a commission agent under APMC Act makes supplies on behalf of an agriculturist. Further, as per provisions of clause (b) o....
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....pals & same is also reflected in the invoices issued by the commission agent. 5.4 That the supply of goods by the commission agent on behalf of the farmer (principal) to the trader /purchasers is a taxable supply in terms of definition as at section 2(108) of MGST Act, 2017. The goods i.e., Turmeric is classified under tariff heading 0910 and are taxable at 5%. The Commission agent has the authority to pass the title of goods on behalf of the principals to the buyer & also raises the invoice in their own name. (Invoices provided by the applicant shows the same.) 5.5 That the Appellant is liable to get registered u/s a 22 (1) of MGST Act, 2017. As the Appellant is also actively involved in the sale of Turmeric to the traders on behalf of the farmers, the Appellant raises an invoice to the traders in their own name. This activity constitutes supply of goods, i.e., Turmeric, classified under tariff heading 0910 that are taxable to 5% of GST. 5.6 In view of the above, the Appellant, in the instance case, qualifies to be Agent under schedule I to the MGST Act 2017 and liable to be registered in terms of sub-section (1) of section 22 of MGST Act with regard to supply of goods to....
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....egal portions. As the section 24 of the CGST Act contains non-obstante clause (i.e., Notwithstanding anything contained in sub-section (1) of section 22), these provisions are having overriding effect on provisions of section 22(1) of the CGST Act. Therefore, the requirement of GST registration by such specified persons including agent will be governed under provisions of section 24 of the CGST Act and not under section 22(1) of the CGST Act. If the intention of lawmakers is that the agent is always liable to tax and get registered under section 22(1) of the CGST Act even if the principal is not covered as taxable person, then the provisions of section 24 (vii) of the CGST Act would become redundant. Where in all case the agent is considered as a taxable person (even including a situation where the principal is not liable to tax) and liable for registration under section 22(1) of the CGST Act, then making the agent again liable for compulsory registration under section 24(vii) of the CGST Act is unwarranted. The Appellant submits that all provisions of the law have to be read and understood in harmonies way so that the specific provisions does not become redundant: and the intentio....
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....d under 2(d) of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, and thereby, the commission agent services provided by the Appellant should be exempted from levy of GST as per the entry at SL No. 24(i)(g) and SL No. 54(g) of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, respectively. In view of the foregoing, the Appellant's counsel further contended that the Appellant was not required to take GST registration. Shri Naik further.placing reliance on the Respondent's submissions contended that even the State GST Department-has categorically mentioned the fact that the processes of boiling, drying, and polishing, on the raw turmeric, are being performed by the farmers themselves on their land to make it marketable for the primary market, thereby, satisfying the essential conditions laid under the definition of "Agri cultural produce". As regards the jurisdictional officer's reliance placed on the Advance Ruling No. KAR/ADRG 23/2019, dated 12.09.2019 issued by the Karnataka Advance Ruling Authority in the case of Morigeri Traders, it was argued that the said Advance Ruling referred by the jurisdictional o....
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....mat/Register to be used / maintained by such license holders. 8.5 The Appellant's activities are exclusively related to the declared 'agricultural produce' which is brought for sale by the agriculturists / farmers in the primary market viz: APMC market areas. The 'turmeric' is one of such declared agricultural produce and is brought for marketing/sale by the agriculturist /farmer, duly processed and polished as is the general practice in vogue since long. Sangli is one of the largest and oldest turmeric market in India. DISCUSSIONS AND FINDINGS 9.1 At the outset we would like to examine the first issue as to "whether the Turmeric (Turmeric in Whole form - not in powder form) is covered under the term 'Agricultural Produce" The term 'Agricultural Produce' has been defined in GST law under 2(d) of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, which reads as under:- (c) "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, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usual....
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.... polishing, are carried out by the farmers or producers themselves on their farm land. In order to support their contention, they have furnished an affidavit filed by one of the local farmers stating that various processes, such as, boiling, drying and polishing of fresh harvested turmeric are carried out by farmers in their farms to make the turmeric marketable. They have also furnished a letter dated 05.01.2022 issued by the Halad Saunshodhan Yojna, Krishi Saunshodhan Kendra Digraj, Sangli working under the mahatma Phule Krishi Vidyapeeth, Rahuri, stating that various processes, such as, boiling, drying and polishing of fresh harvested turmeric are carried out by farmers in their farms to make the turmeric marketable. Further, they have also furnished a letter dated 01.02.2022 issued by APMC Vasmat, Higoli, stating that various processes, such as, boiling, drying and polishing of fresh harvested turmeric are carried out by farmers in their farms to make the turmeric marketable. Thus, on perusal of the above affidavit and the declaration made by the said organisation to the effect that various processes, such as, boiling, drying and polishing of fresh harvested turmeric are carrie....
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....s primary or wholesale market for sale of agricultural produce by the farmers where the Traders/wholesalers make the purchase of such agricultural produce, by following laid down procedure. Thus, attributable to the said APMC letter, it can be aptly concluded that the APMC market, where the impugned product is sold by the farmers, is nothing but primary market. 9.7 Thus, the impugned product has squarely satisfied all the conditions required to qualify for the "agricultural produce''. 9.8 Now, we move to decide the HSN code and rate of GST on the impugned product. For this, we would like to refer to the first schedule of the Customs Tariff Act, 1975 as mandated under the GST rate Notification 1/2017-C.T. (Rate) dated 28.06.2017. On perusal of the relevant Chapter and Heading, it is observed that the impugned product, i.e., dried turmeric(whole) will get classified under the Heading 0910 30 20 bearing description as "Dried Turmeric (Curcuma)", attracting the GST at the rate of 5% (i.e., CGST @ 2.5% +SGST @ 2.5%). 10.1 Now, we proceed to decide the second issue as to whether the services rendered by the Appellant as a Commission Agent in APMC, Sangli, are liable to GST in te....
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....ertake the supply of dried turmeric(whole) in the capacity of agent on behalf of the farmers. They have further contended that since they are undertaking the said supply of the impugned product as an agent of the farmer, who is not regarded as taxable person in terms of Section 2(107) of the CGST Act, 2017 read with Section 23(1 )(b) ibid., they are also not required to take registration as envisaged under Section 24(vii) of the CGST Act, 2017. The Appellant have also relied upon the CBIC Circular No. 57/31/2018-GST, dated 04.09.2018 to substantiate their contention that they are not liable for compulsory registration under clause (vii) of section 24 of the CGST Act, 2017. 11.2 In this regard, we would like to examine the relevant CBIC Circular No. 57/31/2018-GST, dated 04.09.2018 and the corresponding corrigendum to this Circular issued vide F.No. CBEC/20/16/04-GST dated 05.11.2018. The relevant extract of the aforesaid corrigendum is being reproduced hereinunder for the sake of reference: "Further, according to clause (vii) of section 24 of the CGST Act, a person is liable for mandatory registration if he makes taxable supply of goods or services or both on behalf of ....