TMI Blog2019 (10) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case the applicant has presented sample copies of invoices where the applicant issues the invoices for further supply of goods on behalf of the principal. This shows that the provision of the goods by the growers to the applicant is covered under Entry 3 of Schedule I of the CGST Act, 2017. Accordingly the relationship between the applicant and the growers is that between a principal and its agent - however, the fact that the applicant has the authority to pass or receive the title of the goods on behalf of the principal shows that the applicant predominantly acts as the commission agent. Since the applicant is a commission agent within the meaning of the term, he also falls under the definition of agent - The cut flowers are covered under the definition of agricultural produce as is defined in the para 2(d) to the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Entry No.54 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 prescribes exemption for the services relating to agricultural produce by way of services by a commission agent for sale or purchase of agricultural produce - Since the applicant is a commission agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acilitate auction service and develop floriculture. c. The applicant takes 3.5% from growers and 1.5% from buyers as commission for the services rendered, i.e. auctioning of flowers, which is the main stream of revenue. Other incomes earned or accrued include interest, packing charges, registration charges, etc. 4. The applicant submits as under regarding the nature of his activities: 4.1 The flower growers and the buyers are all registered members of the applicant and only registered members can take part in the auction process. The growers bring flowers to the premises of the applicant and would be placed in lots and samples be identified. The buyers would verify the lot and they would make their bids. The lowest rate at which the goods could be sold i.e. minimum price is fixed by the buyer and the maximum price is fixed by the applicant considering the demand for flowers. The applicant has deployed Dutch Auction System in which the Digital Auction Clock runs in the decreasing order and the price per stem reduces from maximum to minimum. The unsold flowers would be reauctioned on the immediately next day after completing the auction of that day s f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer which does not alter its essential characteristics but makes it marketable for primary market. The cut flowers are in the nature of agricultural produce as it is a produce out of cultivation of plants on which no processing is done. 5.4 A combined reading of the above makes it clear that the services by any APMC or Board or services by a commission agent for sale or purchase of agricultural produce are exempt from levy of GST. The applicant is not an APMC or a Board. However, it falls under the third limb - a commission agent . It collects 3.5% commission from the growers and 1.5% commission from the buyers as commission for the services rendered, i.e. for facilitating growers to auction their flowers and the buyers to purchase. 5.5 The applicant states that they are a non-profit organisation providing facilities of flower verification, cold room service and software service to the growers and also provide Wi-fi software and flower display and same day payment clearance facilities to the buyers, out of the commission collected. The applicant, while registering the member as a grower, collects the documents in support of the claim that he is a growe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Circular No. 57/31/2018-GST dated 04th September 2018 issued by CBIC. The Circular examines the scope of Principal-agent relationship in the context of Schedule I of the CGST Act. Para 7 of the said Circular is critical to the issue. The same is reproduced below for reference:- It may be noted that the crucial factor is how to determine whether the agent is wearing the representative hat and is supplying or receiving goods on behalf of the principal. Since in the commercial world, there are various factors that might influence thus relationship, it would be more prudent that an objective criteria is used to determine whether a particular principal-agent relationship falls within the ambit of the said entry or not. Thus, the key ingredient for determining relationship under GST would be whether the invoice for the further supply of goods on behalf of the principal is being issued by the agent or not . Where the invoice for further supply is being issued by the agent in his name then, any provision of goods from the principal to the agent would fall within the fold of the said entry . However, it may be noted that in cases where the invoice is issued by the agent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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