Bhaktawar Mal Kamra & Sons, In re – [2019] 110 taxmann.com 138 (AAR – HARYANA)

The applicant is a commission agent providing services to the farmers for selling the agricultural produce to various buyers such as traders, manufacturers or stockists. It has sought an advance ruling to determine whether the applicant is liable to obtain GST registration for services relating to purchase or sale of agricultural produce?

The Authority for Advance Rulings, Haryana observed that as per the provisions of the CGST Act, 2017, an agriculturist who supplies produce out of cultivation of land is not liable for GST registration and cannot be considered as a ‘taxable person’. Therefore, a commission agent who is making supplies on behalf of such agriculturist, who is not a taxable person, is also not liable for compulsory GST registration.

Under GST, scope of supply covers the activities undertaken through an agent. However, as per exemption notification services provided by commission agents relating to purchase or sale of agricultural produce have been exempted from GST. Hence, such commission agents, even when they qualify as agents whose services fall under scope of supply, are not liable to be registered if the agricultural produce or other goods or services supplied by them are wholly exempt from GST. However, in cases where the supply of agricultural produce is not exempted and liable to tax, such commission agents shall be liable for registration if the aggregate turnover, in a financial year exceeds the threshold limit of Rs. 20 lakh rupees.

The Authority for Advance Rulings, Haryana held that a commission agent who is making supplies on behalf of agriculturist, who is not a taxable person, is not liable for compulsory registration under GST. However, if the aggregate turnover of supply of exempted as well as taxable goods supplied by commission agent exceeds the threshold limit, then such commission agent shall be liable for registration.