GST – States – CIRCULAR No. 57/2018 – Dated:- 5-11-2018 – CIRCULAR Commissioner of State Tax, Gujarat State, Ahmedabad Dated 5th November, 2018 CIRCULAR No. 57/2018 No.GSL/GST/B.13 Subject: Scope of Principal-agent relationship in the context of Schedule I of the GGST Act. In terms of Schedule I of the Gujarat Goods and Services Tax Act, 2017 (hereinafter to as the GGST 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 regarding the scope and ambit of the principal-agent relationship under GST. In order to clarify some of the issues and to ensure uniformity in the implementation of the provisions of the law across the field formations, the Commissioner of State Tax, in exercise of its powers conferred under section 168 (1) of the GGST Act hereby clarifies the issues in the succeeding Paras. 2. As per section 182 of the Indian Contract Act, 1872, an agent
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d 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 GGST 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 furtherance of business . Where the consideration is not extant in a transaction, such a transaction does not fall within the ambit of supply. But, in certain scenarios, as elucidated in Schedule I of the GGST Act, the key element of consideration is not required to be present for treating certain activities as supply. One such activity which has been detailed in Para 3 of Schedule I (hereinafter referred to as the said ent
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cial 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 would fall within the fold of the said entry. However, it may be noted that in cases where the invoice is issued by the agent to the customer in the name of the principal, such agent shall not fall within the ambit of Schedule I of the GGST Act. Similarly, where the goods being procured by the agent on behalf of the principal are invoiced in the name of the agent then further provision of the said goods by the agent to
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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 Mis XYZ for the supply of goods in terms of Schedule I. Scenario 3 Mr. A, an artist, appoints M/s. B (auctioneer) to auction his painting. M/S B arranges for the auction and identifies the potential bidders. The highest bid is accepted and the painting is sold to the highest bidder. The invoice for the supply of the painting is issued by M/s. B on the behalf of Mr. A but in his own name and the painting is delivered to the successful bidder. In this scenario, M/S B is not merely providing auctioneering services, but is also supplying the painting on behalf of Mr. A to the bidder, and has
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g 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 J. 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 I. 9. In scenario I and scenario 2, Mr. B shall not be liable to obtain registration in terms of clause (vii) of section 24 of the GGST Act. He, however, would be liable for registration if his aggregate turnover of supply of taxable services exceeds the threshold specified in sub-section (1) of section 22 of the GGST Act. In scenario 3, M/s. B shall be liable for compulsory registration in terms of the clause (vii) of section 24 of the GGST Act. In respect of commission agents in Scenario 4, Government Notification. Finance Department No. (GHN-41)/G
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