Page 104 - GSTL_26th March 2020_Vol 34_Part 4

614 GST LAW TIMES [ Vol. 34
buyer and seller of the products and for offering these facilities a percentage of
the sale value is received as Auction fees. Therefore, the services provided by
them falls under the category of Auctioneer Service and they do not get covered
under Commission Agent.
8.5 They submitted that since the respondent company is not a Com-
mission agent, he is not eligible for the exemption as per 54(g) of Notfn. No.
12/2017-Central Tax (Rate), dated 28-6-2017. Further, it has been argued that, as
the basic character of the service provided by the respondent is “Auctioneer Ser-
vice”, the services provided by them gets more appropriately covered under
SAC 9961 [Entry No. 5 of Notfn No. 11/2017-C.T. (Rate), dated 28-6-2017,] as
services of whole sale auctioning houses and hence liable to pay tax.
Personal hearing :
9. The Appellants were called for a personal hearing on 3rd Dec., 2019
and were represented by Smt. Sashi Krishna K.S., Superintendent of CGST,
Range AND-8, Bangalore North Commissionerate, Authorized representative
who reiterated the grounds of appeal. The respondent company was represented
by Shri M.K. Manohar, Chartered Accountant who requested for time to file
cross objections to the appeal filed by the Department.
10. The respondent company vide letter dated 7th Jan., 2020 filed their
cross objections to the appeal filed by the department against Advance Ruling
No. KAR/ADRG 87/2019, dated 26th Sept., 2019. They also submitted a copy of
the Standard Operation Procedures Manual adopted by their company IFAB,
Invoices raised by them evidencing the principal agent relationship and proof of
growers being 66.88% shareholders in IFAB. In the cross objections, the respond-
ent submitted that they satisfy all the conditions for being an agent as defined
under Section 2(5) of the CGST Act, 2017; that since they have the authority to
pass or receive the title of the goods on behalf of the principal, it shows that they
act as a commission agent. They contend that Sl. No. 54(g) of Notification No.
12/2017-C.T. (R), dated 28-6-2017 is a beneficial provision and has to be con-
strued liberally on compliance with the conditions stipulated therein.
10.1 They submitted that they squarely fall within the ambit of “Princi-
pal Agent” relationship; that they provide a platform for the growers of flowers
to showcase their produce before the market using latest state of the art technol-
ogy provided by them; that they provide the primary market space for the flower
growers. They submitted that primary markets are those which are situated in
the producing areas, commodities produced in the nearby surrounding areas are
brought here and sold in these markets. The agricultural produce is purchased
by intermediaries, which later they sell into wholesale markets. The very fact that
more than 66.82% of the stakeholders are flower growers and balance held by the
Govt. of Karnataka show clearly the intention that the respondent company
(IFAB) is created as a primary market and to exploit the state-of-the-art technolo-
gy to showcase the flowers to a wide variety of market. Therefore, the Appel-
lant’s contention that they are not a primary market is incorrect.
10.2 They submitted that the exemption from levy of GTS on services
provided by Agricultural Produce Marketing Committee or Board or services by
a commission agent for sale or purchase of agricultural produce also includes the
services provided by an auctioneer. The basic ingredient, whether the services
are provided as factor, broker, commission agent, arhatia, del-credere agent, an
auctioneer or any other mercantile agent is the principal agency relationship. The

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