TMI BlogValue of supply in case of Pure Agent Concept in GST [Rule 33 of CGST Rules]X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 service to A, which would be on a principal to principal basis. The ancillary service of transportation is procured by B on behalf of A as a pure agent and expenses incurred by B on transportation should not form part of value of Customs Broker service provided by B to A. This, in sum and substance is the relevance of the pure agent concept in GST. RELEVANCE OF PURE AGENT UNDER GST The concept is borrowed from the erstwhile Service Tax Determination of Value Rules, 2006 and carried forward under GST. Under the GST Valuation Rules 2017 pure agent is given the following meaning. Pure agent means a person who - a) enters into a contractual agreement with the recipient of supply to act as his pure agent to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he preceding para explains who will be considered as a pure agent. The valuation rules provide that expenditure incurred as pure agent, will be excluded from the value of supply, and thus also from aggregate turnover. However, such exclusion of expenditure incurred as pure agent is possible only and only if all the conditions required to be considered as a pure agent and further conditions stipulated in the rules are satisfied by the supplier in each case. The supplier would have to satisfy the following conditions (in addition to the condition required to be satisfied to be considered as a pure agent) for exclusion from value as under:- i. the supplier acts as a pure agent of the recipient of the supply, when he makes payment to the third party on authorization by such recipient; ii. the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and iii. the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. In case the conditions are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levies and 2. Airport levies do not form part of the value of services provided by the airlines and consequently no GST should be charged by airline on airport levies. Clarification Section 2(31) of the CGST Act states that consideration in relation to the supply of goods or services or both includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person. Thus, PSF and UDF charged by airport operators are consideration for providing services to passengers. PSF and UDF being charges levied by airport operator for services provided to passengers, are collected by the airlines as an agent and is not a consideration for any service provided by the airlines. Thus, airline is not responsible for payment of ST/GST on UDF or PSF provided the airline satisfies the conditions prescribed for a pure agent under Rule 33 of the CGST rules . It is the licensee, that is the airport operator (AAI, DIAL, MIAL etc.) which is liable to pay ST/GST on UDF and PSF. Airlines may act as a pure agent for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing details in the invoice issued by it to RPM Ltd. S.No. Particular Amount 1 A ge n c y charges 5,00,000 2 Un l o a d i n g of machine at Kandla port, Gujarat 50,000 3 C h a r g e s for transportation of machine from Kandla port, Gujarat to its Mudra Logistics godown in Ahmedabad, Gujarat 25,000 4 C h a r g e s for transportation of machine from Mudra Logistics Ahmedabad godown to the warehouse of RPM Export Import House in Mumbai, Maharashtra 28,000 5 P r e p ar e d and submitted Bill of Entry and paid customs duty 5,00,000 6 D o c k d u e s paid 50,000 7 P o r t charges paid 50,000 8 H o te l expenses 45,000 9 Tr a v e l l in g expenses 50,000 10 T e l e p h o n e e xp e n s e s 2,000 C o m put ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
