The Andhra Pradesh Authority for Advance Ruling (AAR) held that Goods and Services Tax is leviable at 18% ( 9% Central Goods and Services Tax + 9% State Goods and Services Tax ) on brokerage charges by brokers, even when the produce is agricultural or exempt.
The petitioner, M/s Gayatri Enterprises is a Commissioning Agent/Broker dealing in brokerage of Agricultural Produce, which eases the transactions between wholesalers and millers/farmers.
For functioning the same it imposes a fixed cost per bag of the brokerage from the parties. Its name shall not be cited anywhere in the sale or purchase invoice of the transactions. Just for brokerage amounts either on a monthly/quarterly/half yearly/annual basis, the petitioner raises the GST e-invoice.
The petitioner deals in the brokerage of Agricultural products like Urad, UradDhall, UradGhota, Urad Husk, Moong, MoongDall, Moong Husk, Toor, Jawar, and Karamani. Such are the only items we are dealing with as of now.
It is most relevant to note that such products demand processing/milling/dehusking to draw them into a marketable form. The petitioner questioned “As we are dealing with the brokerage of agricultural produce (which requires processing), we have obtained Goods and Services Tax Registration and we are charging Goods and Services Tax at the rate of 18%. Please let us know, is our interpretation correct?”
The authority bench witnessed that, “Commission earned in such a scenario is taxable under Goods and Services Tax as a service at 18%. Goods and Services Tax registration applies to all commission and brokerage income irrespective of the turnover limits of the taxpayer.”
It observed that, “In view of the above it is clarified that processed pulses fall outside thc definition of agricultural produce given in notification No. 11/2017-CT(Rate) and 12/2017-CT (Rate) and corresponding notifications issued under Integrated Goods and Services Tax and State Goods and Services Tax Acts and therefore the exemption from Goods and Services Tax is not available to them.”
The applicant, they are processing (dehusking/milling) the products to make them marketable. On assessment of the documents and bills submitted via petitioner including with the application, the assessee is collecting Goods and Services Tax on the brokerage charges.
It was also cited that, “In view of the above it is clarified that processed pulses fall outside thc definition of agricultural produce given in notification No. 11/2017-CT(Rate) and 12/2017-CT (Rate) and corresponding notifications issued under Integrated Goods and Services Tax and State Goods and Services Tax Acts and therefore the exemption from Goods and Services Tax is not available to them.”
The authority bench held that the applicant needed to receive registration and is required to pay Central Goods and Services Tax @ 9% and State Goods and Services Tax @ 9% as per notification 11/2017-Central Tax (Rate) on 28.06.201, irrespective of whether the goods involved in the transaction are exempted or taxable under Goods and Services Tax.
| Applicant Name | M/s Gayatri Enterprises |
| GSTIN of the applicant | 37ANUPK6901H1ZL |
| Date | 04.01.2024 |
| Represented By: | K.M.V.L. Pavan Kumar |
| Andhra Pradesh GST AAR | Read Order |