Page 102 - GSTL_26th March 2020_Vol 34_Part 4

612 GST LAW TIMES [ Vol. 34
after this, if they are unsold, they would be sent back to the growers with the de-
livery challan. The respondent company charges 3.5% from growers and 1.5%
from buyers as commission for the services rendered, i.e. auctioning of flowers,
which is the mainstream revenue. Other incomes earned or accrued include in-
terest, packing charges, registration charges, etc.
5. The respondent company filed an application for Advance Ruling
under Section 97 of the CGST Act, 2017 in respect of the following question :
Whether the “commission earned from auctioning of flowers is covered
under entry no. 54(g) of Notification No. 12/2017-Central Tax (Rate), dated
28-6-2017 and entry no. 54(g) of Notification (12/2017) FD 48 CSL 2017, dat-
ed 29-6-2017?
6. The respondent company submitted before the Authority for Ad-
vance Ruling that the activities conducted by them falls within the definition of
‘agent’ as defined in clause (5) of Section 2 of the CGST Act, 2017; that the cut
flowers are in the nature of the ‘agriculture produce’ as defined in para 2(d) of
the explanation to Notification No. 12/2017-C.T. (R), dated 28-6-2017 as it is a
produce out of cultivation of plants on which no processing is done; that the ser-
vices by a commission agent for sale or purchase of agricultural produce are ex-
empt from levy of GST as per the Entry No. 54(g) of the said Notification.
7. The Authority for Advance ruling examined the case of the respond-
ent company and vide Ruling No. KAR/ADRG 87/2019, dated 26th Sept., 2019,
arrived at the conclusion that the relationship between the respondent company
and the growers is one of an agent and a principal and since the respondent
company, as a commission agent is providing services for sale or purchase of
agricultural produce viz. ‘cut flowers’, the same is covered under clause (g) of
Entry 54 of Notification No. 12/2017-C.T. (R), dated 28-6-2017 and hence is ex-
empted from GST.
8. The jurisdictional CGST officer reviewed the impugned order passed
by the Authority and being aggrieved by the said order, filed an appeal before us
on the following grounds :
8.1 The respondent is a Public Ltd. Company providing a platform for
buying and selling of flowers for both seller and buyers through Auctions. The
prime objective of the said company is to “auction” high quality cut-flowers of
various flower crops, every day in both export and domestic flower market. The
respondent company also showcases the flower potential through auctioning of
all kinds of flowers and floral accessories and provides link to reputed Auction
Centres of the World through e-auctioning of flowers. Basically the respondent
provides a forum wherein the flowers and other floriculture produces are bought
and sold by the member of the IFAB through the auction process and applicant
collects a commission at 3.5% from growers/sellers and 1.5% from buyers on the
transaction value for the transaction carried on by way of auction at IFAB. Apart
from auctioning of flowers, the activity of the respondent company also includes
receiving of flowers, grading and quality check, cold storage facility, Auction
management, flower packing and processing, dispatch of flowers. Therefore, the
respondent provides a host of services to the sellers and buyers of flowers viz.,
storage, packing, transport which are ancillary and incidental to the main service
i.e., Auction service. They also submitted that the service rendered by the re-
spondent does not fit into any of the categories specified in Sl. No. 54 of the Noti-
fication No. 12/2017-C.T. (R), dated 28-6-2017, because the respondent-company

GST LAW TIMES  26th March 2020  198