GST TERMINOLOGY (PART -2)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 10-10-2016
The provisions of model GST law prescribes various types of persons for different purposes and taxation. Some of these are being used for first time. Let's discuss these terms in relation to person or taxable persons in section 2 model GST law, viz,
* Agent (Clause 5)
* Agriculturist (Clause 8)
* Casual taxable person (Clause 21)
* Manufacturer (Clause 66)
Agent [Section 2(5)]
'Agent' means a person who carries on the business of supply or receipt of goods and/or services on behalf of another, whether disclosed or not and includes a factor, broker, commission agent, arhatia, del credere agent, intermediary or an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not.
Accordingly, following attributes are essential for anyone to be called an 'agent' –
* An agen
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n agent. When a concern (commercial concern, firm etc.) becomes an agent, it is called an agency. Thus, all non-individual agents could be termed as agency. For being called as agency, that agency must represent some other concern or person and by virtue of that representation, is called its agency or agency. The agency acts and works on behalf of his or its principal and there must be some other person on where behalf it is acting.
Literally, agency means a relationship between two persons, by agreement or otherwise, where one may act on behalf of the other (the principal). [Black's Law Dictionary]
A business or establishment of an agent; function of an agent; active operation, action,
intervening action. [Oxford Dictionary].
According to the Law of Agency & Partnership by Harold Gill Reuschtein and William A. Gregory (2nd edition 1990), the basic theory of the agency device is to enable a person, through the services of another, to broaden the scope of his activities and receive
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y the service provider as a pure agent of the recipient of service shall be excluded from the value of taxable service subject to some conditions an specified in valuation rules. GST shall be levied for transactions between a principal and an agent as a deemed supply. Any amount of consideration (e.g. commission, brokerage etc.) will be subject to GST.
Agriculturist [Section 2(8)]
'Agriculturist' means a person who cultivates land personally, for the purpose of agriculture.
For this purpose, 'agriculture' is defined in clause (7). Accordingly, 'agriculture' with all its grammatical variations and cognate expressions, includes floriculture, horticulture, sericulture, the raising of crops, grass or garden produce and also grazing, but does not include dairy farming, poultry farming, stock breeding, the mere cutting of wood or grass, gathering of fruit, raising of man-made forest or rearing of seedlings or plants. Forest is a forest under Indian Forest Act, 192
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dingly, 'To cultivate personally' has been defined to mean to carry on any agricultural operation on one's own account-
(a) by one's own labour, or
(b) by the labour of one's family, or
(c) by servants on wages payable in cash or kind (but not in crop share) or by hired labour under one's personal supervision or the personal supervision of any member of one's family;
For this purpose, a widow or a minor or a person who is subject to any physical or mental disability or is a serving member of the armed forces of the Union, shall be deemed to cultivate land personally if it is cultivated by her or his servants or by hired labour. Further, in the case of a Hindu Undivided Family, land shall be deemed to be cultivated personally, if it is cultivated by any member of such family.
This expression has been used in the definition of 'agriculturist' and a person will be considered as an 'agriculturist' only when a person cultivates land personally. To cultivate p
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Dictionary, agriculture is the science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products.
According to Wikipedia, agriculture (also called farming or husbandry) is the cultivation of animals, plants, fungi, and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the development of civilization. The study of agriculture is known as agricultural science. Agriculture generally speaking refers to human activities, although it is also observed in certain species of ant and termite.
Section 65D (c) stipulates that specified services in relation to both, agriculture and agricultural produce are in negative list.
Section 9 of model GST law provides that agriculturist shall not be considered as a taxable person an
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ness.
For this purpose, agent has been defined in section 2(5), supply is defined in section 2(92) read with section (3), place of business in section 2(75) and taxable territory in section 2(98) of model law.
Casual taxable person are required to be registered u/s 19 read with Schedule-III. The exemption from registration based on threshold of aggregate turnover would not apply to casual taxable persons. Thus, even where their turnover is below the minimum threshold, registration would be required.
Manufacturer [Section 2(66)]
'Manufacturer' shall have the meaning assigned to it by the Central Excise Act, 1944.
Under Central Excise Act, 1944, 'manufacture' has been defined differently u/s 2(f) of
the said Act. According to Section 2(f) of the Central Excise Act, 1944, 'Manufacture' includes any process-
* incidental or ancillary to the completion of a manufactured product;
* which is specified in relation to any goods in the Section or Chapter notes of the F
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is used in sections 150, 151 and 152 of the model GST law dealing with transitional provisions for inputs, semi finished goods or finished goods removed for job work processes and returned on or after appointed day.
(To be continued …..)
Reply By Ganeshan Kalyani as =
Nice article Sir. Detailed analysis of the provision and reproduced in a lucid language. Thanks for the time, effort.
Dated: 11-10-2016
Reply By Ganeshan Kalyani as =
The point of taxation shall shift to supply in GST, then where there is need for definition of term manufacture.
Dated: 11-10-2016
Reply By Dr. Sanjiv Agarwal as =
Dear Ganeshan ji,
Thank you for the comments. Central excise is going to be subsumed in GST hence, there is no need to borrow definition of 'manufacturer' from Central Excise Act, 1944. There is a reference in transitional provisions. (Section 150,151,152)
Thanks & Regards,
CA Neha Somani
Dated: 18-10-2016
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