Difference between pure agent and consignee agent

[RAM SHARMA]

Dear Experts,

Please explain difference between pure agent and consignee agent as per new valuation and reimbursement rule in service tax 2006.

Thanks

[YAGAY andSUN]

1. Pure agent is the creation of Service Tax Laws whereas Consignment agent is the creation of Mercantile Laws.
2. Expenses incurred by the Pure Agent on behalf of Principal will not form the part of taxable value hence no service tax will be paid subject to condition mentioned in the provisions of Pure Agent.  But on the expenses incurred by the consingment agent may me included for levy of taxes and duties.

[Radha Arun]

A consignment agent can be a 'pure agent' of the principal for certain transactions. 'Consignment agent' is a commercial role, while 'pure agent' is a mode of carrying out a transaction. A person functions as a 'pure agent' in a transaction if that transaction has all the features listed in rule 5(2) of the Service Tax (Determination of Value) Rules, 2006

[RAM SHARMA]

It means that we have not required consignment agent transferred to pure agent to get expenses incurred by principal which is not a part of taxable value. It is depends only that features which is listed in rule 5(2) of the Service Tax (Determination of Value) Rules, 2006

Pl confirm.

Thanks

[Radha Arun]

Mr Ram SHarma, your further question is not very clear. But yes, you can continue to function as consignment agent and at the same time claim deduction of certain expenses as pure agent.

AI Summary

Pure agent status affects taxable value under valuation rules; consignee agent is a commercial role with different tax treatment. The legal distinction is that pure agent is a construct of service tax valuation rules allowing exclusion of reimbursed expenses from taxable value when prescribed criteria are met, whereas consignment agent is a commercial role; a consignment agent can qualify as a pure agent for particular transactions if the statutory features for pure agent treatment are satisfied.