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Pure Agent Concept in GST - GST Law and Procedure [January, 2019] - GSTExtract ..... een them (provider of service and recipient of service) in respect of the main service is on a principal to principal basis, the relationship between them in respect of other ancillary services is that of a pure agent. Let’s understand the concept by taking an example. A is an importer and B is a Custom Broker. A approaches B for customs clearance work in respect of an import consignment. The clearance of import consignment and delivery of the consignment to A would also require taking service of a transporter. So A, also authorises B, to incur expenditure on his behalf for procuring the services of a transporter and agrees to reimburse B for the transportation cost at actuals. In the given illustration, B is providing Customs Brokers ..... x x x x x Extracts x x x x x Pure Agent Concept in GST - GST Law and Procedure January, 2019 - GST x x x x x Extracts x x x x x ..... ry to the importer at the price agreed upon in the contract. In such case, the Customs Broker would be using the transport service for his own interest (as the agreement requires him to deliver the goods at the importers place) and thus would not be considered as a pure agent for the services of transport procured. Another important fact is that, the person who provides any service as a pure agent receives only the actual amount for the services provided. Coming back to our example of Importer and Customs Broker, the agreement provides reimbursement of transport services utilised at actuals. In this case, let’s say the value of transport service was ₹ 10,000/-. If the Customs Broker charges any amount more than ₹ 10,000/-, ..... x x x x x Extracts x x x x x Pure Agent Concept in GST - GST Law and Procedure January, 2019 - GST x x x x x Extracts x x x x x ..... d, such expenditure incurred shall be included in the value of supply under GST. The following illustration will make the concept clearer. Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to Registrar of the Companies. The fees charged by the Registrar of the companies, registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the payment of those fees. Therefore, A’s recovery of such expenses is a reimbursement and not part of the value of supply made by A to B. Some examples of pure agent are: 1. Port fees, Po ..... x x x x x Extracts x x x x x Pure Agent Concept in GST - GST Law and Procedure January, 2019 - GST x x x x x Extracts x x x x x
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