Services provided by Agricultural Produce Marketing Committee (APMC) - CBEC Clarifies
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.
Board observes," 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. 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.
Board Clarifies: the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-ST. 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.
Incidentally, services provided by any Agricultural Produce Marketing Committee or Board, fall under the proposed negative list of services.
Circular No. , Dated: April 27, 2012