Circular no. 73/ 3/2004 ST
5th January, 2004
F.No.159/3/2003-CX.4
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Custom
Subject: – Levy of Service Tax under category of Clearing & Forwarding Agents in respect of Adhatiyas.
I am directed to say that under Section 65 of Finance Act, 1944 and as brought out by Board”s letter no. F.B.43/7/97-TRU dated 11.7.97 there must exist a relationship of principal and an agent for bringing grain agent in the ambit of C & F agent of the farmer and in CBEC Circular no. 48/10/2002-ST dated 13.9.2002, it has been clarified that Adhatiya”s (Food grain agents) activity do not fall under the scope of Clearing and Forwarding Agents services and hence would not be liable for Service Tax under this category. The circular issued is a general circular and is not with reference to any state or class of Adhatiyas. Even though a bunch of representations received from various trade associations in Maharashtra specifically have misinterpreted the circular to apply only to the state of Rajasthan. In fact reference to Rajasthan and section 75 of the Rajasthan Agricultural Marketing Products Act, 1954 is only to explain the situation.
2. Incidentally the activity of grain agent is covered under the ‘Commission Agent’ falling under the purview of ‘Business Auxiliary Services’, which has come into force from 1st July, 2003. Commission Agents as per the definition are covered under the Notification No 13/2003- ST dated 20th June 2003 and are exempt from Service Tax.
2. Suitable trade notice may be issued for the benefit of the trade.
3. The receipt of this Circular may kindly be acknowledged.
4. Hindi version will follow separately.
Manish Mohan
Under Secretary to the Govt. of India
