Central Tax Circulars

CGST Circular 74/2018

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioners of Central Tax (All) The Principal Directors

General/ Directors General (All)

Madam/Sir,

Subject: Collection of tax at source by Tea Board of India – Reg.

1) Tea Board of India (hereinafter referred to as the, “Tea Board”), being the
operator of the electronic auction system for trading of tea across the country
including for collection and settlement of payments, admittedly falls under the
category of electronic commerce operator liable to collect Tax at Source
(hereinafter referred to as, “TCS”) in accordance with the provisions of
section 52 of the Central Goods and Service Tax Act, 2017 (hereinafter referred
to as, “the CGST Act”).

2) The participants in the said auction are the sellers i.e. the tea producers
and auctioneers who carry out the auction on behalf of such sellers and
buyers.

3) It has been represented that the buyers in the said auction make payment of
a consolidated amount to an escrow Account maintained by the Tea Board. The
said consolidated amount is towards the value of the tea, the selling and
buying brokerages charged by the auctioneers and also the amount charged by the
Tea Board from sellers, auctioneers and buyers. Thereafter, Tea Board pays to
the sellers (i.e. tea producers), from the said escrow account, for the supply
of goods made by them (i.e. tea) and to the auctioneers for the supply of
services made by them (i.e. brokerage). Under no circumstances, the payment is
made by the Tea Board to the auctioneers on account of supply of goods i.e.,
tea sold at auction.

4) A representation has been received from Tea Board, seeking clarification
whether they should collect TCS under section 52 of the CGST Act from the
sellers of tea (i.e. the tea producers), or from the auctioneers of tea or from
both.

5) The matter has been examined. In exercise of the powers conferred under
sub-section (1) of section 168 of the CGST Act, for the purpose of
uniformity in the implementation of the Act, it is hereby clarified, that TCS
at the notified rate, in terms of section 52 of the CGST Act, shall be
collected by Tea Board respectively from the –

(i) sellers (i.e. tea producers) on the net value of supply of goods i.e. tea;
and

(ii) auctioneers on the net value of supply of services (i.e. brokerage).

6) It is requested that suitable trade notices may be issued to publicize the
contents of this Circular.

7) Difficulties faced, if any, in implementation of the above instructions may
please be brought to the notice of the Board.

8) Hindi version would follow.