No GST Exemption on Supply of Brokerage Services for Processed Agricultural Produce | AAR

Case Details: Authority for Advance Rulings, Andhra Pradesh Gayatri Enterprises, In re - [2024] 160 taxmann.com 335 (AAR-ANDHRA PRADESH)

Judiciary and Counsel Details

• • K. Ravi Sankar & B. Lakshmi Narayana, Member
  • K.M.V.L. Pavan Kumar for the Appellant.

Facts of the Case

The applicant was operating as Commissioning Agent/Broker, facilitating transactions between wholesalers and millers/farmers in brokerage of Agricultural Produce. It charged fixed brokerage fee per bag of produce without their name mentioned on invoices. It filed an application for advance ruling to determine whether GST would be levied on brokerage of agricultural produce which is exempt from GST.

AAR Held

The Authority for Advance Ruling (AAR) noted that Notification No. 11/2017-Central Tax (Rate) and Notification No. 12/2017-Central Tax (Rate) define “agricultural produce” as unprocessed or minimally processed produce for primary markets. In the instant case, the de-husking or splitting of pulses would alter the essential characteristics of agricultural produce.

The process involved in making pulses marketable, typically undertaken by pulse millers rather than farmers, would render pulses (de-husked or split) ineligible as agricultural produce. Thus, the AAR held that brokerage services for processed agricultural produce would fall under “Services in relation to wholesale trade” attracting 18% GST as per Notification No. 11/2017-Central Tax (Rate).