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2020 (3) TMI 72 - AAAR - GSTClassification of services - commission earned from auctioning of flowers - principal agent relationship - agricultural produce or not - benefit of exemption in terms of the entry SI.No 54(g) of Notification No 12/2017 CT (R) dated 28.06.2017 - whether IFAB is a ‘commission agent’ rendering services for the sale and purchase of ‘agricultural produce’? - challenge to AAR decision. HELD THAT:- Going by the nature of activities performed by IFAB, they do not merely cause the sale of goods on behalf of their clients, the flower growers/sellers. They undertake the complete process of auction of the flowers and upon completion of the auction, the sales consideration is received not by the sellers but by IFAB. Thereafter, IFAB will make payments to the growers for the flowers supplied to them after deduction of the commission. The payments are made to the growers/sellers on the day following the end of the calendar week. IFAB themselves issue delivery orders which enables the buyers to take delivery of the flowers from the auction house. They do the billing work and collection of sale proceeds on behalf of their clients. IFAB also invests a great deal in the system of sale through the clock. They offer dealers sophisticated facilities for online buying - remote buying. With the help of such services, IFAB is able to attract an increasing number of international buyers to the auction. It therefore appears to reason that this wide gamut of activities of IF AB would go far beyond the scope of a commission agent since the services rendered by them are not restricted only to sale of goods on behalf of the sellers for consideration, which is the main edifice of the definition of commission agent. We are of the view that the activities of the respondent company - IFAB are more appropriately classifiable as ‘Auctioneer service’. Benefit of exemption under SI.No 54(g) of Notf No. 12/2017 CT (R) dated 28.06.2017 - HELD THAT:- The Notification, as it is worded, grants exemption to the services provided by a commission agent. Even if the absence of a definition of “commission agent” in the notification or in the GST statute causes some ambiguity, the notification’s applicability to a particular class of service providers is to be arrived at by a strict construction and the benefit must go to the State. Viewed from this principle, it is clear that the respondent company - IFAB is not eligible for the exemption under entry 54(g) of Notification No 12/2017 CT (R). The commission earned from auctioning of flowers is not eligible for exemption under entry no. 54(g) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 and entry no. 54(g) of Notification (12/2017) FD 48 CSL 2017 dated 29.06.2017 - AAR decision set aside - appeal allowed.
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