The Authority for Advance Rulings (AAR), Tamilnadu has held that the services by the commission agents to the agriculturalists of turmeric can be treated as “ support services ” for which no Goods and Services Tax (GST) is payable.
The applicant is a registered society consist of 357 members who act as agents and their service are regulated and permitted by the Erode Marketing Committee. The members permitted by EMC as agents own their godowns where the agriculturists produce are kept, stored in safe custody. According to the applicant, the agent, who is a member of the applicant stores the turmeric in their godown, the sales of which is as per the guidelines of EMC.
The Authority observed that the service by the Commission Agents as per the submissions of the applicant to the agriculturists of turmeric is service under the Heading 9986 and is taxed to ‘NlL’ rate of CGST.
The authority noted that the activities of the applicant are those covered by the definition of ‘Commission agent’ under ‘The Tamil Nadu Agricultural Produce Marketing (Regulation) Act, t987’.
Section 7(8) of this Act also states that trading in agricultural produce must take place on in notified areas which are licensed from a Market Committee under that Act. These Commission agents provide the space for storage, weighment and facilitate the buying and selling of the produce.
“From the supporting documents and materials filed by the applicant and the various statutory provisions discussed above, it is clear that the activities of the applicant are those services provided by an agent to the farmer, generally provided in relation to agricultural produce in the primary market regulated by a marketing committee. Subclause 24(14) of the Bye-Laws also specifies that the commission charges are towards Godown accommodation, cash credit without interest, use of gunnies loaned, handling and weighment and all other charges incidental to buying and selling and sets a maximum for such Commission. In conclusion, the applicant is only a Commission Agent providing support services for Agricultural produce and the services extended are rightly classifiable as ‘Support service to agriculture..’ under the Heading 9986 and the activity of the applicant attract ‘NlL’ rate,” the authority said.
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