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TMI BlogScope of Principal-agent relationship in the context of Schedule I of the WBGST Act.X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (i.e., jurisdictional officers), the Commissioner, in exercise of its powers conferred under section 168 (1) of the WBGST 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 delineated in the definition, an agent can be appointed for performing any act on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scenarios, as elucidated in Schedule I of the WBGST 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 versa do not fall within the scope of the said entry. Firstly, the supply of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 WBGST 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 to Mr. A. In this scenario, Mr. B is only acting as the procurement agent, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 identifies the buyers and sells the agricultural produce on behalf of Mr. A for which he charges a commission from Mr. A. As per the APMC Act, the commission agent is a person who buys or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of sub-section (1) of section 23 of the WBGST 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 subsection (vii) of section 24 of the WBGST Act. 10. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Commissioner. 11. This circular shall be deemed to have come into force with effect from 04.09.2018. Sd/- (Smaraki Mahapatra) Commissioner, State Tax, West Bengal Date: 18.09.2018 Memo. 400 CT/PRO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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