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TMI BlogScope of Principal-agent relationship in the context of Schedule 1 of the GST ActX X X X Extracts X X X X X X X X Extracts X X X X ..... Ref: Circular No. 57/31/2018-GST dated 4th September, 2018 [F. No. CBEC- 20/ 16/04/2018-GST] Kind attention is invited to Board's Circular No. 57/31/2018-GST dated 4th September, 2018 on the above mentioned subject. In terms of Schedule I of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act ), the supply of goods by an agent on behalf of the principal without consideration 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 formatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on behalf of the principal. From this, it can be deduced that the crucial component for covering a person within the ambit of the term agent under the CGST Act is corresponding to the representative character identified in the definition of agent under the Indian Contract Act, 1872. 5. Further, the two limbs of any supply under GST are consideration and in the course or furtherance of business . Where the consideration is not extant in a transaction, such a transaction does not fall within the ambit of supply. But, in certain scenarios, as elucidated in Schedule I of the CGST Act, the key element of consideration is not required to be present for treating certain activities as supply. One such activity w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oice for the further supply of goods on behalf of the principal is being issued by the agent or not. Where the invoice for further supply is being issued by the agent in his name then, any provision of goods from the principal to the agent would fall within the fold of the said entry. However, it may be noted that in cases where the invoice is issued by the agent to the customer in the name of the principal, such agent shall not fall within the ambit of Schedule I of the CGST Act. Similarly, where the goods being procured by 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tist, appoints M/S B (auctioneer) to auction his painting. M/S B arranges for the auction and identifies the potential bidders. The highest bid is accepted and the painting is sold to the highest bidder. The invoice for the supply of the painting is issued by M/S B on the behalf of Mr. A but in his own name and the painting is delivered to the successful bidder. In this scenario, M/S B is not merely providing auctioneering services, but is also supplying the painting on behalf of Mr. A to the bidder, and has the authority to transfer the title of the painting on behalf of Mr. A. This scenario 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 tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able services exceeds the threshold specified in sub-section (1) of section 22 of the CGST Act. In scenario 3, M/S B shall be liable for compulsory registration in terms of the clause (vii) of section 24 of the CGST Act. In respect of commission agents in Scenario 4, notification No. 12/2017 Central Tax (Rate) dated 24.06.2017 has exempted services by any APMC or board or services provided by the commission agents for sale or purchase of agricultural produce from GST. Thus, the 'services' provided by the commission agent for sale or purchase of agricultural produce is exempted. Such commission agents (even when they qualify as agent under Schedule I) are not liable to be registered according to sub-clause (a) of subsection (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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