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GST Registration of Commission Agent

Jithendra Chary (58 Points)

22 July 2020

Commission Agent Dealing With Raw Cotton Purchase and Sales is Required to Take GST Registration.

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 22 July 2020

A commission agent who is making supplies on behalf of agriculturist, who is not a taxable person, is not liable for compulsory registration under clause (vii) of section 24 of the CGST/SGST Act, 2017. However, if the aggregate turnover of supply of exempted as well as taxable goods by commission agents (Kachha Arhatia) exceeds the threshold limit, such commission agents shall be liable for registration as per section 22 (1) of CGST/SGST Act, 2017.
As per notification no. 43/2017 dated 14-11-2017 issued under Central Goods & Service Tax Act-2017, raw cotton has been inserted at sr. no. 4A in the table notified vide notification no. 4/2017-Central Tax (Rate), dated 28.06.2017 under the CGST Act, 2017. The notification specifies that the tax on the supply of goods (raw cotton) by an culturist shall be payable on reverse charge basis by any registered person as recipient of such supply. As discussed supra, a commission agent who becomes liable for registration under section 22 (1) of the Acts, shall also become liable to pay tax on supply of raw cotton by an agriculturist on reverse charge basis being a registered person.

It is however, made clear that a commission agent (Pucca Arhatia) who does not inform his constituent as to the third party with whom he has entered into a contract on his behalf, rather he acts himself as the recipient of goods, has a personal interest of his own when he enters into a transaction in as much as he can also supply his own goods to the principal. Such commission agents are liable for registration since they qualify as agents under schedule I subject to the provisions of section 22 (1) of the Acts where the aggregate turnover of supply of exempted as well as taxable goods or services or both exceeds the threshold limit. Such commission agents shall also be liable for compulsory registration as per provision of section 24 (1) (vii) of the Acts and they shall be liable to charge tax on RCM on supply of ‘Raw Cotton’.