Gujarat Government issues Corrigendum to Circular regarding Scope of Principal-Agent relationship

Nov 08, 2018 | by Avantis RegTech Legal Research Team


The State Government of Gujarat on November 05, 2018 has issued corrigendum to Circular regarding Scope of Principal-Agent relationship.

In para 9 of the Circular No. 57/2018-GST dated November 05, 2018(effective from September 04, 2018),

for :

“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 sub-section (vii) of section 24 of the Gujarat Goods and Services Tax Act, 2017.”

Read:

“Further, according to clause (vii) of section 24 of the Gujarat Goods and Services Tax Act, 2017, a person is liable for mandatory registration if he makes taxable supply of goods or services or both on behalf of other taxable persons. Accordingly, the requirement of compulsory registration for commission agent, under the said clause shall arise when both the following conditions are satisfied, namely:

a.       the principal should be a taxable person; and

b.      the supplies made by the commission agent should be taxable.

 

Generally, a commission agent under APMC Act makes supplies on behalf of an agriculturist. Further, as per provisions of clause (b) of sub-section (1) of section 23 of the Gujarat Goods and Services Tax Act, 2017 an agriculturist who supplies produce out of cultivation of land is not liable for registration and therefore does not fall within the ambit of the term 'taxable person'. Thus a commission agent who is making supplies on behalf of such an agriculturist, who is not a taxable person, is not liable for compulsory registration under clause (vii) of section 24 of Gujarat Goods and Services Act, 2017. However, were a commission agent is liable to pay tax under reverse charge, such an agent will be required to get registered compulsorily under section 24 (iii) of the Gujarat Goods and Services Tax Act, 2017.”

 

[Corrigendum to Circular No. 57/2018-GST]

 

URL: https://commercialtax.gujarat.gov.in/vatwebsite/download/cir_noti/CIR/CORRIGENDUM%20TO%20CIR-57-SCOPE%20OF%20PRINCIPAL-AGENT%20RELATIONSHIP.pdf


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