In re Rajasthan Rajya Sahakari Kriya Vikriya Sangh Ltd (GST AAR Rajasthan)
1. Whether the applicant is liable for charging goods and service tax under the RGST Act, 2017 and CGST Act, 2017 on providing service for procurement of agricultural produce i.e. oilseeds and pulses from farmers either itself or through Kray Vikray Sahakari Samiti on behalf of it’s principal i.e. National Agriculture CO-Operative Marketing federation of India Ltd. (NAFED).
The applicant is not liable for charging goods and service tax under the RGST Act, 2017 and CGST Act, 2017 on providing service for procurement of agricultural produce i.e. oilseeds and pulses from farmers either itself or through Kray Vikray Sahakari Samiti on behalf of its principal i.e. NAFED as the same is exempted for a Commission Agent of agricultural produce under Serial No. 54 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
2. Whether the applicant is liable for charging RGST/CGST or IGST as the case may be on it’s outward supplies of goods as well as services after having procured through Krah Vikrah, Sahakari Samiti according to the purchase order of the NAFED
(i) The applicant is not liable for charging RGST/CGST or IGST on outward supply of pulses(other than branded) through Krah Vikrah, Sahakari Samiti according to the purchase order of the NAFED as the same is exempted under Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017.
(ii) The applicant is liable for charging RGST/CGST or IGST on outward supply of Oilseeds (other than seed quality) through KrahVikrah, Sahakari Samiti according to the purchase order of the NAFED and attracts GST @ 5% (SGST @ 2.5% + CGST @ 2.5%) in accordance with Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.
3. Whether the applicant being a Co-Operative society registered under the Rajasthan State Co-Operative Society Act, 1953 now consolidated in the Rajasthan Co-Operative Societies Act, 2001 is liable to deduct Tax at Source (TDS) from payment to or credit of Krah Vikrah, Sahakari Samiti /RAJFED under Notification No. 50/2018-central tax dated 13.09.2018 for their services of procurement of oilseeds and pulses for the applicant to be supplied by the applicant to it’s principal NAFED.
As the applicant is not covered under Notification No. 50/2018- central tax dated 13.09.2018 read with Section 51 of CGST Act, 2017 and is therefore not liable to deduct Tax at Source (TDS) from payment to or credit of KrahVikrah, Sahakari Samiti /RAJFED.
4. Whether the applicant being a Co-Operative society registered under the Rajasthan State Co-Operative Society Act, 1953 now consolidated in the Rajasthan Co-Operative Societies Act, 2001 is liable to deduct Tax at Source (TDS) from payment to or credit of RAJFED under Notification No. 50/2018-Central Tax dated 13.09.2018 for their services of procurement of gunny bags, transportation, insurance and services of surveyors for the applicant to be supplied by the applicant to it’s principal NAFED itself.
As the applicant is not covered under Notification No. 50/2018-Central Tax dated 13.09.2018 read with Section 51 of CGST Act, 2017 and is therefore not liable to deduct Tax at Source (TDS) from payment to or credit of KrahVikrah, Sahakari Samiti /RAJFED for their services of procurement of gunny bags, transportation, insurance and services of surveyors for the applicant to be supplied by the applicant to its principal NAFED
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING RAJASTHAN
Note: Under Section 100 of the CGST/ RGST Act, 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/ RGST Act, 2017, within a period of 30 days from the date of service of this order.
The issue raised by Rajasthan Rajya Sahakari Kriya Vikraya Sangh Ltd., situated at 4, Sahkar Bhawan, Bhawani Singh Road, Jaipur 302001, (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2)(b) and (e), given as under :
b. applicability of a notification issued under the provisions of this act,
c. determination of time and value of supply of goods or services or both;
e. Whether any particular thing done by the applicant with respect o goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term;
Further, the applicant being a registered person (GSTIN is 08AAAAR0279B1ZU, as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling.
1. SUBMISSION AND INTERPRETATION OF THE APPLICANT:
a. The applicant is a co-operative society registered under the Rajasthan Co-operative Societies Act, 1953, (Now 2001and has its office at Bhawani Singh Road, ‘C’-scheme, Jaipur, and is a registered taxable person under the Rajasthan Goods and Service Tax Act ,2017, and Central Goods and Service Tax Act, 2017 vide GSTIN No. is 08AAAAR0279B1ZU.
b. That, the applicant deals in trading in various items and providing services as commission agent to other registered Taxable
c. That, the applicant carries it’s business activity of providing services to agriculturist for buying their agriculture produce and selling those produces in the open
d. That, the applicant also helps to the National Agriculture Co-Operative Marketing federation of India Ltd., (NAFED) for procuring agriculture produce from farmers and supply them as per their instructions i.e. NAFED for implementation of Government policies of purchases on Minimum Support Price (MSP) and purchase support Schemes of items as prescribed by the Central as well as the State Governments.
e. That, the applicant entered into an agreement with NAFED (a Government of India Undertaking) on 03/11/2018 for procurement of oilseeds and pulses, for the NAFED under the Government Schemes of MSP and PSS respectively.
f. That, the applicant has been allowed for commission @ 2% by the NAFED for procurement of oilseeds and pulses either through Kray Vikray Sahkari Samiti or by itself, in case of procurement is through Kray Vikray Sahkari Samiti, out of the above 2 % commission, 1 % has to be given to the Kray Vikray Sahkari Samiti.
g. That, the applicant has been ordered to provide the above oilseed and pulses after packing in gunny bags. That, for the above requirement of packing in gunny bags the applicant made an agreement on 12/09/2018 with the NAFED for procuring gunny bags after calling tenders from respective sellers in the open
h. That, according to the terms and condition number 02 of the above agreement dated 12/09/2018 the applicant is liable for making payment to the NAFED @ 1% + IGST on the naked cost price of the Gunny bags supplied by the supplier agency, of the purchases made by NAFED for and on behalf of the applicant.
i. That, in terms of agreement dated 03/11/2018 with NAFED, the RAJFED instructed to Kray Vikray Sahkari Samiti for procuring the oilseeds and pulses and supply them to the applicant.
j. That, according to the Para number 3. ii of the above agreement dated 12/09/2018 the Jute Mill shall arrange loading of the gunny bags of NAFED’s authorised transporter and transporter shall deliver the goods at the same destination provided by the RAJFED/NAFED. The NAFED shall co-ordinate with the principal and Jute Mill for the smooth functioning of the same. That, according to the point number 3.vi of the above agreement the NAFED shall make payment to the Jute Mills/Transporter/ Survey or son behalf of the applicant, for your ready reference copy of the agreement dated 12/09/2018.
k. That, the applicant has been dealing as an “agent” of NAFED in the whole transaction and make payment on procurement of goods whatever it may be either by itself or through Kray Vikray Sahkari Samiti to the farmers.
l. That, on procurement/ purchases of gunny bags by NAFED under instruction of the applicant, the applicant make payment to the NAFED and the final payment is made by the NAFED to the sellers.
m. That, the Government of India as well as the State Government of Rajasthan both of them have notified through their notification numbers 50/2018 – Central Tax Dated: 13th September, 2018, and F. 12(46)FD/Tax/2017-Pt.-113 dated 13/09/2018 respectively about to deduct tax at source (TDS) on payments or credit on supply of goods as well as service or both on contract to contractors according to section 51 of both the Acts i.e. CGST/RGST, for your ready reference both of them are reproduced hereunder:-
Section 51 of the CGST Act:-
51.(1) Notwithstanding anything to the contrary contained in this Act, the Government may mandate,
(a) a department or establishment of the Central Government or State Government; or
(b) local authority; or
(c) Governmental agencies: or
(d) such persons or category of persons as maybe notified by the Government on the recommendations of the Council, (hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one per cent from the payment made or credited to the supplier(hereafter in this section referred to as “the deductee”) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:
Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient.
Explanation.—For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tor and cess indicated in the invoice.
n. The applicant submitted a copy of agreement between NAFED and itself and copy of letter of registration as a Co-operative Society under Rajasthan Co-operative Society Act, 1953 vide e-mail dated 06.03.2019.
o. The applicant further submitted copy of invoices issued by itself to NAFED regarding procurement of agricultural produce, Commission charges and also invoices raised by Krya Vkrya Sahakari Samiti regarding procurement of agricultural produce, Commission charges on vide e-mail dated 22.03.2019.
2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT
a. Whether the applicant is liable for charging goods and service tax under the RGST Act, 2017 and CGST Act, 2017 on providing service for procurement of agricultural produce i.e. oilseeds and pulses from farmers either itself or through Kray Vikray Sahakari Samiti on behalf of its principal i.e. National Agriculture CO-Operative Marketing federation of India Ltd. (NAFED).
b. Whether the applicant is liable for charging RGST/CGST or IGST as the case may be on its outward supplies of goods as well as services after having procured through Krah Vikrah, Sahakari Samiti according to the purchase order of the NAFED.
c. Whether the applicant being a Co-Operative society registered under the Rajasthan State Co-Operative Society Act, 1953 now consolidated in the Rajasthan Co-Operative Societies Act, 2001 is liable to deduct Tax at Source (TDS) from payment to or credit of KrahVikrah, Sahakari Samiti/RAJFED under Notification No. 50/2018-central tax dated 13.09.2018 for their services of procurement of oilseeds and pulses for the applicant to be supplied by the applicant to its principal NAFED.
d. Whether the applicant being a Co-Operative society registered under the Rajasthan State Co-Operative Society Act, 1953 now consolidated in the Rajasthan Co-Operative Societies Act, 2001 is liable to deduct Tax at Source(TDS) from payment to or credit of RAJFED under Notification No. 50/2018-Central Tax dated 13.09.2018 for their services of procurement of gunny bags, transportation, insurance and services of surveyors for the applicant to be supplied by the applicant to it’s principal NAFED itself.
3. PERSONAL HEARING
In the matter personal hearing was granted to the applicant on 01.03.2019 at Room no. 2.29 NCRB, Statue Circle, Jaipur. Mr. G.N. Sharma, Advocate (Authorised Representative) of the applicant appeared for PH. During the PH, he reiterated the submissions already made in the application and also submitted additional submission (copy of establishment of RAJFED as a Co-operative society under Rajasthan Co-operative Societies Act, 1953(now 2001) along with a copy of agreement between RAJFED and NAFED. He further requested that the case may be decided at the earliest.
4. COMMENTS OF THE JURISDICTIONAL OFFICER
The jurisdiction officer (Assistant Commissioner, CGST Division-H, CGST Jaipur Commissionerate, Jaipur) has submitted his comments vide letter dated 01.02.2019 which can be tla. G.s:c. summarized as, the applicant is liable for charging CGST and SGST on providing service for procurement of agricultural produce and on outward supplies through Krah Vikrah, Sahakari Samiti as the same are not mentioned in exempted services notified through Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017. The applicant is also covered under Notification No. 50/2018- Central tax dated 13.09.2018 read with section 51 of CGST Act, 2017 and is therefore liable to deduct Tax at Source from payment to or credit of Krah Vikrah, Sahakari Samiti/RAJFED for the aforesaid services.
5. FINDINGS, ANALYSIS & CONCLUSION:
I. We observe that, the applicant has entered in to an agreement dated 03.11.2018 with NAFED for procurement of agricultural produce i.e. oilseeds and pulses for NAFED under the government schemes of MSP and PSS respectively. That as per said agreement, the procured material has to be delivered in gunny bags to NAFED. The applicant in this regard has entered in to a separate agreement dated 12.09.2018 with NAFED for procuring gunny bags after calling tenders from respective sellers in the open market. The applicant receives commission @2% from NAFED for procurement of agricultural produce and if this procurement is being done through Kray Vikray Sahkari Samiti, then, out of the above 2% commission, 1% is given to Kray Vikray Sahkari Samiti by the applicant.
II. The activity of the applicant is either a supply of goods or a service of commission agent. The relevant provisions under GST law in respect of principal-Agent relationship are reproduced below:-
