Principal-to-agent GST supply rules apply to timber deposits, with valuation, time of supply, and supervision charges taxed accordingly.

A statutorily mandated deposit of timber with a Government Timber Depot was treated as a supply under GST because the depot functioned as an agent selling the goods by auction on behalf of the principal. The value of that supply had to be determined under the GST valuation rules applicable to principal-to-agent supplies, using open market value or the prescribed alternative methods. The time of supply was linked to removal of the timber for deposit and the corresponding invoice stage. Supervision charges collected by the depot were held taxable as a distinct service, and reverse charge applied where the depot was a government department.

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Issues: (i) Whether depositing timber with the Government Timber Depot amounted to a supply under GST as a principal-to-agent transaction; (ii) how the value of such supply was to be determined; (iii) when the time of supply arose; and (iv) whether supervision charges collected by the depot were liable to GST under reverse charge.

Issue (i): Whether depositing timber with the Government Timber Depot amounted to a supply under GST as a principal-to-agent transaction.

Analysis: Section 7 of the Central Goods and Services Tax Act, 2017 treats as supply, inter alia, transactions in goods for consideration and the activities specified in Schedule I. Paragraph 3 of Schedule I covers supplies of goods by a principal to an agent where the agent undertakes to supply such goods on behalf of the principal. The depot was set up under the statutory framework for purchase and sale of timber, and the sale process was carried out through auction with the proceeds remitted to the appellant. On that basis, the depot functioned as an agent rather than as a buyer on principal-to-principal terms.

Conclusion: The deposit of timber with the depot constituted a supply under GST and the finding was against the assessee.

Issue (ii): How the value of such supply was to be determined.

Analysis: For supplies through an agent, valuation is governed by the GST valuation rules. The governing method is open market value, or in the alternative the prescribed percentage basis for similar supplies, and if valuation cannot be determined by those methods, the residual rules apply.

Conclusion: The value of supply was to be determined in accordance with the GST valuation rules and the finding was against the assessee.

Issue (iii): When the time of supply arose.

Analysis: In the case of goods, the time of supply is linked to the issue of invoice and the date by which the invoice is required to be issued, read with the movement of goods. Since the timber was removed for delivery to the depot, the relevant time was the date of removal and corresponding invoice stage.

Conclusion: The time of supply was the date of removal of the timber for deposit with the depot and the finding was against the assessee.

Issue (iv): Whether supervision charges collected by the depot were liable to GST under reverse charge.

Analysis: The depot rendered a distinct custodial and supervisory service in addition to the agency function. That service did not fall within the exemption or exclusion relied upon, and the consideration received as supervision charges was taxable as supply of services. The reverse charge consequence applied where the depot was a government department.

Conclusion: Supervision charges were liable to GST and the finding was against the assessee.

Final Conclusion: The appeal failed in substance, and the advance ruling was affirmed in full, including the taxability of the timber deposit transaction, valuation, timing, and supervision charges.

Ratio Decidendi: A statutorily mandated transfer of goods to a depot that functions as an agent for subsequent auction sale is a supply by a principal to an agent under Schedule I of the GST law, and the associated valuation and timing follow the agent-based GST rules.

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