AP AAR: 18% GST Will Be Levied on Pulses Processed by Agri Brokers

Processed pulses received post-dehusking and splitting the grains are not similar to the whole pulse grains and not agricultural produce, making them taxable for goods and services tax (GST) at the rate of 18 per cent, ordered the Andhra Pradesh authority for advance rulings (AAR).

For easing the transactions between wholesalers and millers or farmers brokerage of agricultural produce charged will draw 18 percent GST, AAR said.

The matter is concerned with the Andhra Pradesh-based Gayatri Enterprises, a broker in agricultural produce like urad dal and its varieties, Moong Dal and variants, Toor, Jowar and Karamani. From the parties, the company levies a fixed price per bag.

Nowhere Its name is not specified in the sale or purchase invoices of transactions. It aims for invoices to the parties just for the brokerage amount.

The company received the Goods and Services Tax registration and charged 18 per cent tax, but parties opposed all over the country mentioned that GST does not apply to agricultural produce and brokerage.

The company asks for AAR orders whether its activities such as de-husking, and splitting of pulses will attract GST or not.

The AAR noticed that the method of de-husking or splitting of pulses is not held by farmers or at farms but by pulse millers.

The pulses — dehusked or split — are even not agricultural produce. The whole pulse grains like whole gram rajma are counted beneath agricultural produce, the AAR explained.  

Hence the processed pulses are counted outside the ambit of agricultural produce and the waving from the GST is not available to them, AAR mentioned. It ruled that the work of the company as a broker in the pulses arrives beneath the class of the commission agent. 

As the petitioner needed to file the 18 Percent GST as per the applicable rate to the commission agent whether the goods concerned in the transaction are waived or levied to tax under the GST regime, the AAR held.

Tax experts mentioned that the AAR has opted to avail a restricted view which shows the intricacies of taxation under the agricultural profession.

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