18% GST payable on Supply of Services relating to Sale or Purchase of Rice: AAR [Read Order]

The Karnataka Authority of Advance Ruling (AAR) ruled that 18% GST payable on supply of services relating to sale or purchase of rice.

The Applicant is a Proprietary concern registered under the provisions of Central Goods and Services Tax Act, 2017 as well as Karnataka Goods and Services Tax Act. 2017. The Applicant is a Rice canvassing commission agent for rice millers and traders and are selling Agricultural Produce (Rice) as per the Agricultural Produce Marketing Committee Act (APMC Act) of the State.

The applicant has sought advance ruling in respect of the issues Whether the applicant is entitled to collect GST on Supply of services which pertains to selling of agricultural produce as per APMC Act. Is there any special case where the applicant has to collect GST on the Service provided (Branded and unbranded).

The coram of Dr. Ravi Prasad and T.Kiran Reddy held that the applicant is liable to collect CGST at the rate of  9% and KGST at the rate of  9% on supply of services relating to sale or purchase of rice. The applicant by canvassing for Branded and unbranded rice of millers and other traders is liable to pay CGST at the rate of 9% and KGST at the rate of 9% on the consideration received or receivable as commission from the rice miller or traders.

“The activity of the applicant in the instant case viz., the activity of canvassing for Rice as ‘Commission Agent’ is covered under SAC 9961. Further, the applicant is only charging service charges and not issuing sale invoices on behalf of the principals. Hence the activities of Commission Agent by canvassing for Rice by the applicant attracts Central Tax-CGST @ 9% and KGST @ 9% towards marketing of ‘Rice’ including branded Rice’ also,” the Authority said.

“The applicant is providing the marketing service for Rice millers and traders supplying both branded and unbranded rice on a commission basis, the activities rendered by the applicant is taxable in terms of the provisions of CGST/KGST Act as discussed supra. Hence the applicant is required to register in terms of section 22 of CGST Act, 2017 and is also required to discharge -CGST @ 9% and KGST @ 9% for which commission is received,” the AAR noted.

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