GST Provisions for APMC based business

Summary: For APMC-based businesses, GST registration is required if the turnover exceeds ₹40 lakh annually, with mandatory registration for inter-state taxable supplies and exemptions for exempt supplies like garlic and pulses. Registration must be at the principal and additional business places, with proper documentation, including rent agreements and electricity bills for updating GST profiles. Business owners must maintain records at each place of business, and these must be retained for six years from the annual return due date. Tax invoices are required for taxable supplies and must include details like supplier and buyer information, HSN codes, and GST amounts. Bills of supply are used for exempt items, while delivery challans are issued for transporting goods without sale. E-way bills are required for goods movement exceeding ₹50,000, with exceptions for exempt goods and specific scenarios. For APMC businesses, valuation includes charges like mandi tax, freight, and incidental expenses. GST on allied services such as job work and commission is generally applicable at reduced rates, while transportation charges fall under reverse charge mechanisms unless the goods qualify as agricultural produce under specific conditions. Input Tax Credit (ITC) is generally allowed for business-related assets, but not for construction materials or certain vehicles. ITC must be reversed proportionally for businesses supplying both taxable and exempt goods.

# REGISTRATION 

♦ Threshold: Registration is required if turnover in a financial year crosses 40 lakh

(only if engaged in the supply of goods) – [Section 22(1)]

*Exception:- Threshold limit is “Nil” and registration is mandatorily required for making inter-state taxable supply – [Section 24(1)]

*Exemption:- No registration is required for exempt/nil rated supply (Eg, Garlic, Onion, Pulses, Cereals etc) – [Section 23(1)(a)]

♦ Location of registration: At the principal place of business (Like shop, office) and every additional business place (Like Godown, Processing plant) – [Section 25(1), Section 2(85)]

Note:

a. The warehouse / Transporter’s godown where goods are stored is also treated as a place of business and shall be added in GST registration as an additional place of business.

b. The rent agreement & electric bill shall be arranged for updating such place in the GSTIN Profile.

c. Any amendment, addition or deletion of business shall be updated within 15 days. – [Rule 19(1)]

♦ Display of Reg. Certificate: The certificate of registration shall be displayed in a prominent location at the principal place of business and every additional place or place of business, along with the GST Number on the name board. – [Rule 18]

# ACCOUNTS & RECORDS [Section 35, Rule 56] 

• Responsibility of the owner to keep and maintain at every principal business place details of:-

• Also, records related to all additional business places shall be kept at such places.

Eg: Stock register at Godown/warehouse and Production register at the processing plant.

• Records are required to be mandatorily retained for 72 months ie 6 years from the due date of the Annual return for the year.

# TAX INVOICE – BILL OF SUPPLY – DELIVERY CHALLAN – E-INVOICE 

♦ Tax Invoice [Section 31, Rule 46]:- It shall be issued for all taxable supplies (in triplicate), before or at the time of removal of goods which shall contain:-

a. Name, address and GSTIN of supplier and buyer (if regd.)

b. Tax invoice number (Unique for each FY, like 01/2024-2025) and Date of issue

c. HSN code up to 4 digit (T/o < 5 cr), 6 digit (T/o > 5 cr), 8 digit (Export) for all regd. supply

d. Description and Quantity(UQC) of goods

e. Place of supply, and state name (Address of delivery if POS is in a different state)

f. Net taxable value, GST rate, GST amount, Total value

g. Manual sign (Digital sign in case of electronic invoice)

♦ Bill of supply [Section 31(3)(c), Rule 49]:- It shall be issued for all exempt supplies instead of a tax invoice and shall contain all such fields as required above in the tax invoice, except:- Place of supply, Quantity, Taxable Value, GST Rate, and GST amount.

(For Vegetables like garlic, onion etc; Pulses like lentils, chickpeas etc; Cereals like maize, wheat, barley, millet etc)

♦ Credit-Debit note [Section 34]:- They may be issued wherever it is found that the taxable value or tax charged in the tax invoice exceeds or is deficient in respect of such supply.

For eg; In case of a shortage/foreign matter in goods found post supply, cash discounts (agreement-based) etc 

Note:

1. Single CN-DN can be issued against multiple tax invoices
2. Shall be issued before filing of annual return or 30^th November of subsequent FY (whichever is earlier)

♦ Delivery Challan [Rule 55]:- It is required to be issued (in triplicate), for the purpose of transportation of goods:-

1. For Job work
2. For reasons other than sales such as

Eg; for own use from one premise to another, factory/plant to the warehouse, Goods sent to godown etc

♦ E-Invoice [Rule 48(4)]:- At present, it is mandatory to be generated for taxable B2B supplies by a person whose Aggregate turnover in the preceding FY is more than 5 cr.

Note:-

1. E-Invoice is mandatory in case of export and SEZ Supplies.
2. QR code, having the Invoice Reference Number (IRN) has to be part of tax invoice copy issued to the buyer. 

# EWAY-BILL 

♦ Requirement [Rule 138]:- Every registered person shall generate an Eway bill before causing the movement of goods whose consignment value exceeds 50,000/- (Total value, excluding exempt value)

*Important points*

a.    Eway bill is not required in case goods are exempt (Eg, Garlic, Onion, Pulses, Cereals etc)

b.    Furnishing Part B details is optional in case the goods are transported for a distance of up to fifty kilometer’s within the State or Union territory:

1.    from the place of business of the consignor to the place of business of the transporter or

2.    from the place of business of the transporter finally to the place of business of the consignee, for further transportation.

c.    An eway bill is not required in case goods are being transported up to a distance of twenty kilometres:

1.    from the place of the business of the consignor to a weighbridge for weighment or

2.    from the weighbridge back to the place of the business of the said consignor

subject to the condition that the movement of goods is accompanied by a delivery challan issued in accordance with rule 55

d.    E-way bill may be cancelled electronically on the common portal within twenty-four hours of generation of the e-way bill

e.    The validity of the E-way bill is 200km per day and may be extended within eight hours from the time of its expiry (for valid reasons to be mentioned while extending)

f.     It can also be rejected by the recipient within 72 hours of generation, or else considered deemed accepted.

g.    Eway bill is mandatory in case of interstate movement of goods between registered principal and job worker irrespective of the value of the consignment.

h.    In the case of intra-state movement within the state of Madhya Pradesh:

1.    No e-way bill is required for intra-district movement for any goods or any consignment value

2.    Mandatory for inter-district movement of taxable mandi items having consignment value more than 1,00,000/- (w.e.f 15-04-2022, the earlier limit was 50,000/-)

♦ Documents to be carried by a person in charge of a conveyance [Rule 138A]

The person in charge of a conveyance shall carry—

a. the invoice (except in case of E-invoice, where QR having IRN is sufficient) or bill of supply or delivery challan, as the case may be; and

b. a copy of the e-way bill or the e-way bill number, either physically or mapped to a Radio Frequency Identification Device embedded onto the.

# VALUATION [Section 15]

Value of supply shall include:-

(a) any taxes, duties, cesses, fees and charges levied under any law, if charged separately by the supplier. Eg; Mandi tax charged in invoice

(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both.

Eg; Freight charged in the invoice (F.O.R deals)

Note:- No need to charge GST on freight in invoice, in case of Ex-works deals.

(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply.

(d) interest or late fee or penalty for delayed payment of any consideration for any supply.

# RCM ON TRANSPORTATION (Freight) [Section 9(3)]

Transporter will not collect GST on freight charges, because it is supposed to be paid under reverse charge @5% in case of transportation of goods.

Note:

a. There is an exemption from GST on transportation of “Agricultural Produce”[Notification number 12/2017 CT Rate], but

b. Once the produce bought from the cultivator in an auction (primary market/APMC) or otherwise comes into the hands of a trader and undergoes some form of processing like cleaning, grading, sorting etc using specialised machines (which isn’t usually carried out at an agricultural farm) making it ready for secondary market, it doesn’t qualify to be “agricultural produce” anymore.*

Eg; Spices, herbs, pulses, and cereals that underwent sortex cleaning are not considered agricultural produce under GST law, and the person incurring transportation charges shall pay GST under RCM. 

# GST ON ALLIED SERVICES [Section 9(1)]

1. Job work charges [Notification no. 31/2017 CT Rate]

A person involved in cleaning/grading/sorting or other processing of “Mandi Items”, shall pay GST at a reduced rate of 5% (via notification number 31/2017 CT Rate dated 13-10-2017)

2. GST on commission agent services

Commission agent services involving mandi items are taxable @18% between two traders.

Note:- Services provided by commission agents for sale or purchase at the APMC level are exempt. [Notification number 12/2017 CT Rate]

# GST TRANSACTIONS

♦ Billed to – Shipped to transactions

Party A registered in Neemuch (Madhya Pradesh), sold goods to Party B registered in Mandsaur (Madhya Pradesh), and asked for delivery of goods to Party C registered in Nimbahera (Rajasthan).

1. The place of supply on the tax invoice of party A will be 23-M.P. and on the tax invoice of party B will be 08-Raj. [Section 10(1)(b) IGST act]
2. Transaction type on Eway bill generated by party A will be “Bill-to-Ship-to” and if generated by party B, will be “Billed-from-shipped-from”
3. In case an E-invoice is applicable, sharing only a QR code helps to maintain confidentiality.

♦ Purchase from URD person/Cultivator in other states 

In case of purchase of agricultural goods from an unregistered person or cultivator in another state, no registration is required in that state if goods are not stored at any premises in that particular state while executing the transaction.

An inward supply E-way bill can be generated wherein “URP” is to be written in the GSTIN field of seller details.

♦ Storing goods in other states

When a person buys goods from a dealer registered in another state and stores goods in a warehouse in that state then in such cases, registration is required in that particular state on grounds of that warehouse being a “Place of business”

♦ Input tax credit of assets [Section 17(5)]

1. ITC is not eligible for GST paid on the Construction of Plant/Industry for building material, or to the contractor.
2. ITC is not eligible for GST paid towards Electrical fittings, Plumbing, and immovable roof/ceiling being part of the construction.
3. ITC is not eligible for GST paid on the purchase of cars, or two-wheelers for business purposes.
4. ITC is eligible for GST paid on loading tempo/trucks or other such vehicles used for business
5. ITC is eligible for GST paid on solar plants (being movable) for electricity generation, Air conditioners, mobile phones, CCTV, LEDs, Furniture etc
6. ITC is eligible for GST paid to buy machines being part of a plant (and civil construction necessary for installation of that machine, like foundation work) used in business.
7. ITC is eligible for GST paid towards Labour Insurance (mandatory to be done in any other law, like labour laws)

♦ ITC reversal in case of both Exempt/Taxable supply [Rule 42 & 43]

In case a person is involved in the supply of both taxable as well as exempt goods, then common itc such as bank charges, assets (useful life 5 years), packing materials etc shall be reversed on pro-rata basis. (ie, in ratio of share of exempt supply in total turnover)

# GST RATE & HSN OF CERTAIN AGRICULTURAL ITEMS