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TMI BlogScope of principal and agent relationship under Schedule I of KGST Act. 2017 in the context of del-credere agentX X X X Extracts X X X X X X X X Extracts X X X X ..... nship under GST in the context of del-credere agent (hereinafter referred to as "DCA"). In order to clarify these issues and to ensure uniformity of implementation across field formations, in exercise of powers conferred under section 168 (1) of the Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as "KGST Act") the issues are hereby clarified in succeeding paras. 2 In commercial trade parlance, a DCA is a selling agent who is engaged by a principal to assist in supply of goods or services by contacting potential buyers on behalf of the principal. The factor that differentiates a DCA from other agents is that the DCA guarantees the payment to the supplier. In such scenarios where the buyer fails to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods is issued by the DCA in his own name, the DCA would fall under the ambit of a ent. 2 Whether the temporary short-term transaction based loan extended by the DCA to the recipient (buyer), for which interest is charged by the DCA, is to be included in the value of goods being supplied by the supplier (principal) where DCA is not an agent under Para 3 of Schedule 1 of the KGST Act? In such a scenario following activities are taking place: 1. Supply of goods from supplier (principal) to recipient; 2. Supply of agency services from DCA to the supplier or the recipient or both; 3. Supply of extension of loan services by the DCA to the recipient. It is clarified that in cases where the DCA is not an agent under Para 3 of Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haracter of an independent supply and is subsumed in the supply of the goods by the DCA to the recipient. It is emphasised that the activity of extension of credit by the DCA to the recipient would not be considered as a separate supply as it is in the context of the supply of goods made by the DCA to the recipient. It is further clarified that the value of the interest charged for such credit would be required to be included in the value of supply of goods by DCA to the recipient as per clause (d) of sub-section (2) of section 15 of the KGST Act. 3. This Circular is issued in consonance to the Central Circular No. 73/47/2018-GST dated 05-11-2018 with para materia changes and the same shall be effective from the date from which the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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