Corrigendum to Circular No. 57/31/2018-GST

Circular No.: 57/31/2018-GST (as amended)
Date of Circular: 4th September 2018
Date of Corrigendum: 5th November 2018
Relevant Sections and Rules:

• Central GST Act, 2017:
  • Section 24(vii): Compulsory registration for agents
  • Section 23(1)(b): Exemption from registration for agriculturists
• Indian Contract Act, 1872: Section 182 – Principal-agent relationship

Summary of Circular (as amended):

This circular clarifies the scope and application of Entry 3 of Schedule I of the CGST Act, dealing with supplies between principal and agent without consideration, and outlines registration obligations for agents, especially commission agents under the APMC Act.

1. Principal-Agent Relationship Determination:
   • The supply without consideration between principal and agent is taxable only when the agent undertakes supply or receipt on behalf of the principal.
   • If the invoice is issued in the name of the principal, the transaction is not covered under Schedule I.
2. Compulsory Registration under Section 24(vii) – Amended Position:
   • As per the corrigendum:
     • Compulsory registration for a commission agent arises only when:
       • (a) The principal is a taxable person, and
       • (b) The supply by agent is taxable.
     • If a commission agent supplies goods on behalf of an agriculturist, who is not a taxable person (exempt under Section 23(1)(b)), then compulsory registration is not required under Section 24(vii).

3. APMC Commission Agents – Clarified Status:
   • Typically, commission agents under APMC Act operate on behalf of agriculturists.
   • Since agriculturists are exempt from registration, such agents are not liable for registration under Section 24(vii).
4. Reverse Charge Provision – Separate Registration Requirement:
   • However, if a commission agent is liable to pay tax under reverse charge, then registration is mandatory under Section 24(iii), regardless of the principal’s status.

Source: Circular No.: 57/31/2018-GST (as amended)