2018 (11) TMI 399 - AAR - GST

Levy of GST - sale of tobacco leaves received from farmers made by Commission Agent in an auction - turnover is less than Rs. 20 Lakh - liability to pay GST - Reverse charge mechanism - liability to pay GST when commission agent sell the tobacco leaves received from trader in an auction - Commission Agent receives tobacco from farmers and sell them within the state - value of a supply of goods and/or services. Held that - The services provided by a commission agent for sale or purchase of agricultural produce is having NIL rate of GST - Undoubtedly tobacco leaves are agricultural produce and therefore a commission agent dealing in sale and purchase of tobacco leaves shall be exempted from GST. The above NIL rate of GST on services provided by a commission agent for sale and purchase of agricultural produce is irrespective of who is the principal i.e. whether it is a farmer or a trader. As long as the applicant works as a commission agent for sale and purchase of tobacco leaves his supply of service shall be exempted vide above referred Notification. Sl.No. 5 of referred Notification is for services of Commission agents. which is peged at 18% GST (9 9). However applicant being a Commission Agent dealing in sale and purchase of agricultural produce (tobacco leaves) - Sl.No. 24 of the Notification having NIL rate of Tax is applicable on them. Registration - Held that - Section 23 of CGST Act stipulates that a person who is exclusively supplying exempted services shall not be required to take Registration. Ruling - As per entry No 24 Notification No 11/2017-Central Tax(Rate) dated 28.06.20J7 Commission agent dealing with agricultural produce like tobacco attracts Nil rate of duty. The reverse charge provision has not been notified yet. The tobacco leaves received from trader in an auction is exempted from GST. Commission Agent receives tobacco from farmers and sell them within the state - Held that - As the above service is exempt from tax by the entry No 24 of Notification No 11/2017-Central Tax(Rate). hence. the commission agent is not liable to collect GST.

Summary

Issues Involved:
1. Applicability of GST on sale of tobacco leaves received from farmers by a commission agent with turnover less than Rs. 20 Lakh.
2. Responsibility for paying GST if applicable.
3. Applicability of reverse charge provisions on tobacco leaves.
4. GST liability and collection when a commission agent sells tobacco leaves received from a trader.
5. GST liability for a commission agent receiving tobacco from farmers and earning commission less than Rs. 20 Lakh annually.

Issue-wise Analysis:

Issue 1: Applicability of GST on sale of tobacco leaves received from farmers by a commission agent with turnover less than Rs. 20 Lakh.
- State Member's View: GST is not applicable if the aggregate turnover, including the value of tobacco leaves and commission, does not exceed Rs. 20 Lakhs.
- Central Tax Member's View: Commission agents dealing in agricultural produce like tobacco leaves are exempt from GST as per entry No: 24 of Notification No: 11/2017-Central Tax (Rate).

Issue 2: Responsibility for paying GST if applicable.
- State Member's View: Not applicable since GST is not applicable as per Issue 1.
- Central Tax Member's View: Not applicable.

Issue 3: Applicability of reverse charge provisions on tobacco leaves.
- State Member's View: Reverse charge is applicable on tobacco leaves received by a registered person from an agriculturist as per S.No. 3 of Notification 04/2017 - Central Tax (Rate).
- Central Tax Member's View: The reverse charge provision has not been notified yet.

Issue 4: GST liability and collection when a commission agent sells tobacco leaves received from a trader.
- State Member's View: The commission agent must register under the Act, pay GST, and can collect GST from buyers when selling tobacco leaves received from a trader.
- Central Tax Member's View: The activity is exempt from GST as per entry No: 24 of Notification No: 11/2017-Central Tax (Rate).

Issue 5: GST liability for a commission agent receiving tobacco from farmers and earning commission less than Rs. 20 Lakh annually.
- State Member's View: If the aggregate turnover is less than Rs. 20 Lakhs, the commission agent need not register or collect GST. If the turnover exceeds Rs. 20 Lakhs, registration is required, but the commission received from farmers is exempted as per Notification No. 11/2017.
- Central Tax Member's View: The service is exempt from tax, and the commission agent is not liable to collect GST as per entry No: 24 of Notification No: 11/2017-Central Tax (Rate).

Conclusion:
The members of the Authority for Advance Ruling expressed different views and found no consensus on the issues raised by the applicant. Consequently, the application is referred to the Appellate Authority for further action, and no ruling is issued on this application.