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.
Relevant entry of Schedule 1 –
3. Supply of goods—
- by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
- by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
Hence, all the activities between the principal and the agent and vice versa do not fall within the scope of the said entry.
- The supply of services between the principal and the agent and vice versa is outside the ambit of the said entry, and would therefore require “consideration” to consider it as supply and thus, be liable to GST.
- The element identified in the definition of “agent”, i.e., “supply or receipt of goods on behalf of the principal” has been retained in this entry.
It has been clarified that 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.
- Cases not covered under CGST and registration under GST is not required by agent.
- Where invoice is not issued by agent to final recipient and such invoices is directly issue by principal.
- 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.
- Cases covered under CGST and registration under GST by agent required.
- In case 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 under GST.
- 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.