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Agent required mandatory GST registration for supplying taxable goods

AAR gave an important ruling dated 12th September, 2019 regarding registration of agent for receipt of dry chilies from farmers & supply to traders in case of Morigeri Traders [2019] 110 taxmann.com 200 (AAR-KARNATAKA) which is discussed as below:
 
Facts of the Case
  • The applicant is into the business of rendering service of supplying dry chillies on behalf of farmers to the traders as commission agents.
  • They sell goods on behalf of farmers to the traders, issue invoices to the traders/buyers as prescribed under the APMC Act and also issue sale patties to the farmers.
  • They collect a commission on the services provided to the farmers from the purchasers and the same is also shown in the invoice issued to the purchasers.
Issue Involved
  • Whether the applicant is required to be registered under the GST Act? 
Observation/Ruling
  • Schedule I CGST Act, 2017 states that “Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.”
In this case, applicant is selling goods on behalf of the principal, issues invoice to the buyer in his own name, receives a commission for such sale. Therefore the applicant is an agent as he the authority to pass on the title of the goods on behalf the principal.
  • Supply of dry chillies by the applicant is chargeable to tax @5%
  • Thereby applicant, being a commission agent, is required to be registered under Section 22(1) of CGST Act 2017, as he qualifies to be an agent in terms of para 3 of Schedule I to the CGST Act 2017.
Please click here for Ruling.

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