Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Latest Circulars »
Open DEMAT Account in 24 hrs
 Auction of State Government Securities Feb 23, 2024
 RBI imposes monetary penalty on The Adinath Co-Operative Bank Limited, Dist. Surat, Gujarat
 The Relevance of SEACEN in a Turbulent World (Closing remarks by Michael Debabrata Patra, Deputy Governor, Reserve Bank of India - February 15, 2024 - at the 59th SEACEN Governors' Conference
  Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024
 Extension of validity of Directions under Section 35A read with section 56 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) - HCBL Co-operative Bank Ltd., Lucknow (U.P.)
 Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024
 Directions under Section 35 A read with section 56 of the Banking Regulation Act, 1949 Shimsha Sahakara Bank Niyamitha, Maddur, Mandya District Extension of Period
 Reserve Bank of India (Government Securities Lending) Directions, 2023
 Building resilient brand India amidst global uncertainty (Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India - December 28, 2023 - at the 10th SBI Banking and Economic Conclave in Mumbai)
 Trade Credit for imports into India Submission of return on issuance of bank guarantees for Trade Credits on the Centralised Information Management System (CIMS)
 Minutes of the Monetary Policy Committee Meeting, December 6 to 8, 2023

Regarding services provided by the Agricultural Produce Marketing Committee (APMC) /Board
May, 01st 2012

Circular No. 157/8 /2012-ST

F.No.354/234/2011-TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

(Tax Research Unit)

153, North Block,

New Delhi, 27th April, 2012

To

Chief Commissioner of Customs and Central Excise / Central Excise & Service Tax (All)

Director General of Service Tax /Central Excise Intelligence /Audit; Commissioner of Customs and Central Excise/ Central Excise and Service Tax/ Service Tax (All)

 

Madam/Sir,

 

 

Subject:   Services provided by the Agricultural Produce Marketing Committee (APMC) /Board-- regarding.

 

 

            Representations have been received, seeking clarification regarding the levy of service tax on certain services provided by the Agricultural Produce Marketing Committee (APMC)/Board, using the market fee, in the light of Notification No.14/2004-ST. The representations have been examined. 

2.         APMCs are statutory bodies created with a view to regulate agricultural produce markets. APMCs charge market fee for issuing licenses to whole sale trader-cum-commission agent, wholesale traders, commission agent, mill / factory / cold storage owners or any other buyers of agricultural produce, for an agricultural year. The amount so collected by the APMC, from the licensees, is used for providing among other things facilities like roads, drinking water, weighing machines, storage places, street lights, etc. in the market area.  These services are not provided on one-to-one basis i.e. in consideration or as an obligation to the persons who have tendered the license fee. Some of these services may be capable of being used more conspicuously by the licensees but they do not form part of any contractual obligation to any of the licensees.

3.         Reportedly some field formations are inclined to take a view that services provided by the APMCs are in the nature of Business Support Service (BSS), and hence the exemption made available for BAS in relation to agriculture vide Notification No.14/2004-ST will not be applicable. As a consequence, service tax becomes leviable on the market fee popularly known as mandi shulk, collected by the APMC.

4.         When examined with reference to its constitution and functions, the services provided by APMC out of the market fee collected from the licensees, do not appropriately fall under the category of BSS.  The distinction between BSS and BAS is explained in the instructions dated 28.02.2006 issued from F.No.334/4/2006-TRU. In the light of the above instruction, the service provided by APMC out of the market fee is not in the nature of outsourced service.   It is not possible to hold that the licensees have outsourced the development and maintenance of agricultural market to the APMC, which could have been otherwise undertaken by them, solely in their business interest. Development and maintenance of agricultural market infrastructure undertaken by APMC in accordance with the statute, is for the benefit of all users, rather than an activity solely in the interest of licensees. Hence, APMC cannot be said to be rendering business support service to the licensees. Market fee is not in the nature of consideration for such BSS.

5.         As statutory bodies, APMCs provide basic facilities in the market area out of the market fee collected from the licensees, mainly to facilitate the farmers, purchasers and others. APMCs provide a host of services to the licensees in relation to the procurement of agricultural produce, which are inputs in terms of the definition given in section 65(19) of the Finance Act, 1994 itself. To that extent the meaning of input is much wider in scope than the meaning assigned in rule 2(k) of Cenvat Credit Rules, 2004. Therefore, it is clarified that the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-ST.

6.         However, any other service provided by the APMCs for a separate charge(other than market fee) to either the licensees or farmers or any other person, e.g. renting of shops in the market area, etc. would be liable to tax under the respective taxable heads. This Circular may be communicated to the field formations and service tax assessees, through Public Notice/Trade Notice. Hindi version to follow.

 

(Samar Nanda)

Under Secretary, TRU

Tel/Fax: 011-23092037

--X--

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting