TMI BlogScope of Principal-agent relationship in the context of Schedule I of the HGST Act.X X X X Extracts X X X X X X X X Extracts X X X X ..... deration 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 of the HGST Act hereby clarifies the issues in the succeeding paras. 2. As per section 182 of the Indian Contract Act, 1872, an agent is a person employed to do any act for another, or to represent another in dealings with third person. The person for whom such act is done, or who is so represented, is called the principal . As deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such a transaction does not fall within the ambit of supply. But, in certain scenarios, as elucidated in Schedule I of the HGST 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 entry ) is reproduced hereunder: 3. Supply of goods- (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. 6. Here also, it is worth noticing that all the activities between the principal and the agent and vice vers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the principal would be covered by the said entry. In other words, the crucial point is whether or not the agent has the authority to pass or receive the title of the goods on behalf of the principal. 8. Looking at the convergence point between the character of the agent under both the HGST Act and the Indian Contract Act, 1872, the following scenarios are discussed: Scenario 1 Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various suppliers who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C) to send the goods and issue the invoice directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered under Schedule I. A similar situation can exist in case of supply of goods as well where the C F agent or commission agent takes possession of the goods from the principal and issues the invoice in his own name. In such cases, the C F/commission agent is an agent of the principal for the supply of goods in terms of Schedule I. The disclosure or non-disclosure of the name of the principal is immaterial in such situations. Scenario 4 Mr. A sells agricultural produce by 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 dentifies the buyers and sells the agricultural produce on behalf of Mr. A for which he charges a commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not liable to be registered according to sub-clause (a) of sub-section (1) of section 23 of the HGST Act, if the supply of the agricultural produce, and /or other goods or services supplied by them are not liable to tax or wholly exempt under GST. However, in cases where the supply of agricultural produce is not exempted and liable to tax, such commission agent shall be liable for compulsory registration under sub-section (vii) of section 24 of the HGST Act. 10 . Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Department. ASHIMA BRAR Taxation Commissioner-cum- Commissioner of State Tax, Haryana Dated: Panchkula - Circular - Trade Notice - Public Notice - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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