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TMI Blog2018 (8) TMI 1859X X X X Extracts X X X X X X X X Extracts X X X X ..... er of supply of exempted as well as taxable goods by commission agents (Kachha Arhatia) exceeds the threshold limit, such commission agents shall be liable for registration as per Section 22(1) of CGST/ HGST Act, 2017. As per Notification No. 121/ST-2, dated 14-11-2017 issued under Haryana Goods Services Tax Act, 2017 read with corresponding Notification No. 43/2017, dated 14-11-2017 issued under Central Goods Services Tax Act, 2017, raw cotton has been inserted at Sr. No. 4A in the table notified vide Notification No. 381ST -2, dated 30-6-2017 under the HGST Act, 2017 and corresponding Notification No. 4/2017-Central Tax (Rate), dated 28-6-2017 under the CGST Act, 2017, The notification specifies that the tax on the supply of goods (raw cotton) by an agriculturist shall be payable on reverse charge basis by any registered person as the recipient of such supply. Thus, a commission agent who becomes liable for registration under Section 22(1) of the Acts ibid, shall also become liable to pay tax on supply of raw cotton by an agriculturist on reverse charge basis being a registered person. X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption, the provisional registration under GST was surrendered by the applicant and thus became the unregistered dealer. 8. As per Section 9(4) of HGST Act, 2017, the purchases by registered person from unregistered person was taxable under reverse charge. wherein the tax was to be deposited by the recipient of goods, buyers in auction, and same was being deposited. Thus the revenue was protected and the Traders deposit the Tax and availed input on it. 9. The applicability of Section 9(4) of CGST Act and HGST Act, 2017 was deferred w.e.f. 13-10-2017 upto 31-3-2018 vide Notification No. 38/2017, dated 13-10-2017 issued under CGST Act and vide Notification No. 108/ ST-2, dated 18-10-2017 issued under HGST Act. The applicability of said section had further been deferred to 30-6-2018 vide Notification No. 10/2018, dated 23-3-2018 issued under CGST Act and 44/ST-2, dated 30-3-2018 issued under HGST Act. 10. In order to protect the revenue, the raw cotton was then notified under Section 9(3) of the Act on 14-11-2017 vide Notification No. 121/ST-2, dated 14-11-2017, wherein for the purchase of the goods, being raw cotton, any registered recipient of goods was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmer supplies the goods through farmer and the buyer of the auction is the recipient of the goods. 6. The Agriculturist supplies goods through commission agent and not supplying goods to commission agent. The recipient here means the buyer of goods and not the supplier of goods. 7. Since the payment to farmer is made by the commission agent, there is lack of clarity that whether he be treated as recipient in terms of definition as per Section 2(93) and liable for registration and payment of tax. If yes then following question arises :- 7.1 Who is supplier as the title of transfer of property is given by the commission agent. 7.2 Can one person be treated as supplier as well as recipient. 8. The supplier is defined in Section 2(105) so as to include agent who is supplying the goods on the behalf of farmer and is to be treated as supplier and not the recipient and both the definitions i.e., of supplier and recipient are mutually exclusive, as the supplier needs to collect the consideration from the recipient on the behalf of supplier. Once the agent had fallen in steps of supplier he is collecting the payment from recipient on behalf of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipient in relation to the goods or services or both supplied : From the above definition contained in the provisions of Section 2(93) of HGST Act, it is obvious that the commission agent is recipient of supply of goods. 3. As per definition of Reverse charge contained in Section 2(98) HGST Act, commission agent being recipient is liable to pay tax as reverse charge. The provisions of Section 2(98) of HGST Act are re-produced as under :- 2(98) - "reverse charge" means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or subsection (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act; 4. Section 9(4) of HGST Act makes it crystal clear that the State tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts who deal exclusively in supplying of goods which are not liable to tax i.e. if he deals exclusively in wheat and paddy which are not liable to tax, then the provisions are not applicable otherwise, if he deals in taxable goods i.e. Narma, Kapas, Sarson etc. , then the provisions of GST Act are fully applicable to the commission agents are compulsorily registerable u/ s 24 of Haryana VAT Act. 5. Record of personal hearing Personal hearing in the case vvas conducted on 25-7-2018 which was attended by Sh. Manish Bansal, CA, (POA) along with Sh. Gurdeep Kumar, Sole Proprietor and Sh. Shyam Lal, Manager of the firm. The applicant besides reiterating the submissions made in their application had given additional submissions which were taken on record. After detailed discussions the application was admitted being covered by clause (b) of Section 97(2) of the CGST /HGST 2017. As regard merits, the decision was reserved which is being released today. 6. Discussion and finding of the authority It is the case of the applicant that they are engaged in the business of commission agent wherein they provide services to the farmers for selling the agricultural produce to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f commission agents for foodgrains giving their services as per the APMC Act in the State. One is known by a prevalent name of "Kaccha Arhatia" and the other is a "Pucca Arhatia". An analysis of distinction between the two shall bring more clarity in understanding the controversy posed before us by the applicant. Kaccha Arhatia : (i) A Kachha Arhatia acts only as an agent of his constituent and never acts as a principal. A Pacca Arhatia, on the other hand, is entitled to substitute his own goods towards the contract made for the constituent and buy the constituent's goods on his personal account and, thus, he acts as a principal as regards his constituent; (ii) A Kaccha Arhatia brings a privity contract between his constituent and the third party so that each becomes liable to the other. The Pacca Arhatia, on the other hand, makes himself liable upon the contract not only to the third party but also to his constituent; (iii) Though the Kachha Arhatia does not communicate the name of his constituent to the third party, he does communicate the name of the third party to the constituent, i.e., Form-J is issued to the farmer seller in which the name of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cultivators directly. The price from the purchasers is realised afterwards. In any case it is not the responsibility of the cultivators to realise the price from the purchasers. On the contrary, it is the applicant, i.e., the 'Kachha Arhatia' who is responsible for the payment of the price to the cultivators. Sometimes the cultivators are also paid advances and these are adjusted when the price of the produce is paid to the cultivators.' 13. Since the scope of supply under the GST Act also covers the activities specified in scheduled-I by or undertaken through an agent, the key ingredient for determining relationship would be whether the invoice for the further supply of goods on behalf of the principal is being issued by agent or not. In other words, the crucial point is whether or not the agent has the authority to pass on the title of the goods on behalf of the principal. 14. In the instant case, the commission agent supplies goods to the buyer against 'Form-I' as prescribed under the APMC Act of the State. By issuance of 'Form-I' which as per the APMC Act is 'Bill of Kachha Arhatia', the title of the goods is passed on to the buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per Notification No. 121/ST-2, dated 14-11-2017 issued under Haryana Goods & Services Tax Act, 2017 read with corresponding Notification No. 43/2017, dated 14-11-2017 issued under Central Goods & Services Tax Act, 2017, raw cotton has been inserted at Sr. No. 4A in the table notified vide Notification No. 381ST -2, dated 30-6-2017 under the HGST Act, 2017 and corresponding Notification No. 4/2017-Central Tax (Rate), dated 28-6-2017 under the CGST Act, 2017, The notification specifies that the tax on the supply of goods (raw cotton) by an agriculturist shall be payable on reverse charge basis by any registered person as the recipient of such supply. As discussed supra, a commission agent who becomes liable for registration under Section 22(1) of the Acts ibid, shall also become liable to pay tax on supply of raw cotton by an agriculturist on reverse charge basis being a registered person. It is however, made clear that a commission agent (Pucca Arhatia) who does not inform his constituent as to the third party with whom he has entered into a contract on his behalf, rather he acts himself as the recipient of goods, has a personal interest of his own when he enters into a trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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