Facts: The applicant M/s. Erode Manjal Vanigarkal Matrum Kidangu Urimaiyalargal Sangam is registered Sangam with 357 members under the Tamilnadu Societies Registration Act 1975. Their activities as agents and Service are regulated and permitted by the Erode Marketing Committee (“EMC”) Erode. The members permitted by EMC as agents own their godowns where the agriculturists produce are kept, stored in safe custody. A tender is conducted at the premises/ yard of the EMC. The tender is concluded when the selling price is agreed by the agriculturists. Thereafter the buyer raise a bill on the basis of weighment receipt in favour of the agriculturists with full details. An agreement among and between agriculturists, agents and buyer is executed for payment. The buyer issues a cheque for the sale of the agricultural produce to the agents as per the agreement. On realization, the agent takes his commission for service rendered, balance being returned to agriculturist. They have stated that the agent is neither a seller nor a buyer but is a supplier of service done to agriculturalist/producer and is exempt. The applicant stated that he is supplying service to agriculturist which is exempt under Heading 9986(i)(g) of Notification No 11/2017 – Central Tax (Rate) dated June 28, 2017 (“Notification No. 11”). They stated that they are Commission agent exclusively in respect of their product i.e. Turmeric and charge the agriculturist by providing storage service in warehouses owned or rented by the applicant. The charges are a certain percentage of the sale price of goods. They do not identify the buyers. The actual charges are in line with Erode Marketing Committee norms.
Issue: Whether the services by the commission agent to the agriculturist for sale or purchase of their produce not involving the agents as either a recipient of goods or as a supplier of goods are liable to tax or not?
Held: The Hon’ble AAR of Tamil Nadu vide Order No. 6/AAR/2018 dated August 30, 2018 observed that it is evident from the facts that 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. Thus, it was held 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 ‘NIL’ rate of CGST as per SI. No. 24 (i) (i) (g) of the Notification No. 11 as amended and ‘NIL’ rate of SGST as per SI.No. 24 (i) (i) (g) of G.O.(Ms) No 72 dated June 29, 2017 No.ll(2)/CTR/532(d-14)/2017 as amended.
Citation:  97 taxmann.com 450 (AAR – TAMIL NADU)