GST – States – Trade Notice No. 17/2018 – Dated:- 10-9-2018 – Government of India, Ministry of Finance, Department of Revenue Office of the Chief Commissioner, Goods and Services Tax & Customs – 793001 Crescens Building, M.G Road, Shillong- 793001, Tel.Nos.91-0364-2500131/2502052. Trade Notice No. 17/2018 Dated, Shillong the 10th September,2018 Subject: Scope of Principal-agent relationship in the context of Schedule I of the CGST Act-regarding The Central Board of Indirect Taxes & Customs has issued a Circular No. 57/31/2018GST dated September,2018 for the Trade and as well as all concerned regarding scope of Principal-agent relationship in the context of Schedule I of the CGST Act. In terms of Schedule I of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act'), the supply of goods by an agent on behalf of the principal without consideration has been deemed to be a supply. In this connection, various representations have been received reg
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ction (5) of section 2 of the CGST Act as follows: agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another. 4. The following two key elements emerge from the above definition of agent: a) the term agent is defined in terms of the various activities being carried out by the person concerned in the principal-agent relationship; and b) the supply or receipt of goods or services has to be undertaken by the agent on behalf of the principal. From this, it can be deduced that the crucial component for covering a person within the ambit of the term agent under the CGST Act is corresponding to the representative character identified in the definition of agent under the Indian Contract Act, 1872. 5. Further, the two limbs of any supply under GST are consideration and in the course or furthe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
consideration to consider it as supply and thus, be liable to GST. Secondly, the element identified in the definition of agent , i.e., supply or receipt of goods on behalf of the principal has been retained in this entry. 7. It may be noted that the crucial factor is how to determine whether the agent is wearing the representative hat and is supplying or receiving goods on behalf of the principal. Since in the commercial world, there are various factors that might influence this relationship, it would be more prudent that an objective criteria is used to determine whether a particular principal-agent relationship falls within the ambit of the said entry or not. Thus, the key ingredient for determining relationship under GST would be whether the invoice for the further supply of goods on behalf of the principal is being issued by the agent or not. Where the invoice for further supply is being issued by the agent in his name then, any provision of goods from the principal to the agent w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ssue the invoice directly to Mr. A. In this scenario, Mr. B is only acting as the procurement agent, and has in no way involved himself in the supply or receipt of the goods. Hence, in accordance with the provisions of this Act, Mr. B is not an agent of Mr. A for supply of goods in terms of Schedule l, Scenario 2 M/s. XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods. The auctioneer arranges for the auction and identifies the potential bidders. The highest bid is accepted and the goods are sold to the highest bidder by M/s. XYZ. The invoice for the supply of the goods is issued by M/s. XYZ to the successful bidder. In this scenario, the auctioneer is merely providing the auctioneering services with no role played in the supply of the goods. Even in this scenario, Mr. B is not an agent of M/s. XYZ for the supply of goods in terms of Schedule l. Scenario 3 Mr. A, an artist, appoints M/S B (auctioneer) to auction his painting. M/s. B arranges for the auction and
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
utilizing the services of Mr. B who is a commission agent as per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr. B identifies the buyers and sells the agricultural produce on behalf of Mr. A for which he charges a commission from Mr. A. As per the APMC Act, the commission agent is a person who buys or sells the agricultural produce on behalf of his principal, or facilitates buying and selling of agricultural produce on behalf of his principal and receives, by way of remuneration, a commission or percentage upon the amount involved in such transaction. In cases where the invoice is issued by Mr. B to the buyer, the former is an agent covered under Schedule However, in cases where the invoice is issued directly by Mr. A to the buyer, the commission agent (Mr. B) doesn't fall under the category of agent covered under Schedule l. 9. In scenario 1 and scenario 2, Mr. B shall not be liable to obtain registration in terms of clause (vii) of section 24 of the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =