Case Law Details
In re Bhaktawar Mal Kamra & Sons (GST AAAR Haryana)
Whether commission agent, providing services in relation to sale or purchase of agriculture produce, is liable to obtain registration and is liable for tax under reverse charge mechanism on services provided in sale of raw cotton vide notification No. 121/ST-2, dated 14.11.2017 issued under Haryana Goods and Services Tax Act, 2017 read with corresponding notification No. 43/2017, dated 14.11.2017 issued under the Central Goods and Services Tax Act, 2017 read with Corresponding notification No. 43/2017, dated 14.11.2017 issued under the Central Goods and Services Tax Act, 2017.
The provisions of the Section 7(1) clause (c) provide that the activities specified in schedule I shall be treated as supply under GST, even if made without consideration. One such activity, as detailed in Para 3 of schedule I, is in relation to the activities between the principal and his agent. The scope of principal-agent relationship in the context of Schedule I of the CGST Act is clarified by circular No. 57/31/2018-GST dated 04th September, 2018 (to be read with the corrigendum dated 05 th November, 2018). As clarified vide above circular, the crucial component for covering a person within the ambit of the term ‘agent’, as contained in sub Section (5) of Section 2 of the CGST Act, is corresponding to the representative character identified in the definition of agent under the Indian Contract Act, 1872. The said circular further clarifies that a key ingredient for determining whether the agent is wearing the representative hat and is supplying or receiving goods on behalf of the principal would be whether invoice for further supply or goods on behalf of the principal is being issued by the agent or not. Since, a commission agent ‘Kachha Arhtiya’ supplies goods to the buyers against ‘Form I’ as prescribed under the APMC Act of the State, vide which the titled of goods is passed on to the buyer against an agreed upon rate of the goods. The commission agent also charges its commission and other incidental charges through the said Form I under the APMC Act. The said Form I issued under the APMC Act is therefore sufficient test to hold that the commission agent i.e. ‘Kachha Arhtiya’ is supplying goods on behalf of agriculturists and is covered under the definition of ‘agent’ as contained in sub Section (5) of Section 2 of the CGST/HGST Act.
In view of the above discussion, there is no merit in the argument of the appellant that he cannot be treated as recipient in terms of definition of recipient, as contained in Section 2(93) of the Acts ibid. Further, the reliance on circular No. 452, dated 17.03.1986 by the Central Board of Direct Taxes on this issue is also misplaced as the said instructions are issued under the provisions of different law.
The entry at Sr. No. 4A of the table in HGST notification No. 38/ST-2 dated 30.06.2017 and CGST notification No. 4/2017-Central Tax (Rate), dated 28.06.2017 (inserted vide HGST notification No. 121/ST-2 dated 14.11.2017 and notification No. 43/2017-Central Tax (Rate), dated 14.11.2017 respectively) is reproduced as under:-
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