Agricultural Produce Marketing Committee's services other than its core service will attract tax, the Central Board of Excise and Customs has said

The board has said as statutory bodies APMCs provide basic facilities out of the 'market fee' collected from the licensees mainly to facilitate farmers, purchasers and others and will not be liable to service tax.

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, such as renting of shops in the market area would be liable to tax under the respective taxable heads.

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 or factory or 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 in the market area

These services are not provided on one-to-one basis that is 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.

Tax authorities took a view that services provided by the APMCs are in the nature of business support service and hence liable to tax and not business advisory service that were exempted. The clarification has been issued following representations from APMCs on the issue. (Economic Times)