2019 (4) TMI 2041 - AAAR - GST

Permission for withdrawal of Advance Ruling application - Levy of GST - sale of tobacco leaves received from farmers made by Commission Agent in an auction - turnover is less than ₹ 20 Lakh - HELD THAT - In light of the plea that the applicant himself applied for cancellation of his registration under GST, and the jurisdictional authority confirmed the cancelation in Form REG. 19 dt 27/2/2019 with effect from 31.01.2019, and as the ruling is binding only on the applicant and the jurisdiction authority, the Appellate Authority for Advance Ruling, disposed the appeal as dismissed.

Summary

Issues:
1) Applicability of GST on sale of tobacco leaves received from farmers by Commission Agent with turnover less than ?20 lakhs.
2) Liability to pay tax in case of GST applicability.
3) Applicability of reverse charge provisions for tobacco leaves.
4) GST payment responsibility when commission agent sells tobacco leaves received from trader in an auction.
5) GST liability for commission agent receiving tobacco from farmers and selling within the state with a commission less than ?20 lakhs.

Analysis:
1) The applicant, a commission agent dealing with tobacco leaves, sought an advance ruling on the GST liability for certain business activities. The State Member opined that GST is not applicable if the aggregate turnover, including the value of tobacco leaves and commission, does not exceed ?20 lakhs. The Central Member referred to a notification stating that commission agents dealing with agriculture produce like tobacco attract a 'Nil' rate of duty.

2) Regarding the party liable to pay tax in case of GST applicability, both the State and Central Members deemed this issue not applicable based on the first issue's resolution.

3) On the question of reverse charge provisions for tobacco leaves, the State Member indicated that reverse charge is applicable as per a specific notification, while the Central Member noted that the provision had not been notified yet.

4) When discussing the responsibility for GST payment when a commission agent sells tobacco leaves received from a trader in an auction, the State Member highlighted that the agent must register under the Act, pay GST, and can collect GST from buyers. The Central Member reiterated that the activity falls under an exemption from GST based on the first issue.

5) Lastly, in the scenario where a commission agent receives tobacco from farmers, sells within the state, and takes commission less than ?20 lakhs, the State Member explained that registration and GST collection are not required if the turnover remains below the threshold. The Central Member concurred, stating that since the service is exempt from tax, the commission agent is not liable to collect GST.

In conclusion, due to the applicant's subsequent cancellation of GST registration, the Appellate Authority for Advance Ruling dismissed the appeal as the ruling was binding only on the applicant and the jurisdictional authority, leading to the appeal being disposed of.