Consignment agent place of supply

[Sachin Malpani]

Consignment agent Mr X in Maharashtra (registered dealer) was appointed by Principal Y from Delhi to sales the goods..

Mr Y transfer the goods to mr X and levy igst on it..after that mr y sales the goods in Maharashtra on his own bill (but as per the instructions/order of principal) to the final customer (billing done by Mr X in the name of customer)

So my question is what will consignment agent will charge to the final customer cgst+sgst or igst ?

[KASTURI SETHI]

IGST is applicable and covered under Section 10(1)(b) of IGST Act. Consignment agent (X) (though registered independently as dealer) is working for and on behalf of Principal (owner of goods)-(Y). Here we are concerned with the specific consignment. Consignment agent is to follow the directions of the Principal located in Delhi.. Consignment agent does not himself purchase the goods. Also read definition of 'Agent'. under Section 2(5) of CGST Act.

Section 2(5) of CGST Act : “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;

[Sachin Malpani]

Dear Sir,

There is an error in typing..

Mr Y makes a stock transfer to Mr X and after that Mr X sold goods in Maharashtra on his own billing (on the instructions of Mr Y)

Mr X directly makes the bill to final customer

Still Igst will applicable?

[Sachin Malpani]

Dear Sir,

Actual facts of case :-

Mr X (consignee) is having an Agreement with Mr Y registered in Maharashtra (consignor) to act as his consignment agent for him

In this case Mr Y transfer the stock to Mr X with igst billing from his wearehouses/ factories/depot at delhi, punjab and hariyana

Now after arriving the goods Mr X makes the stock and sold the goods to third party as per orders (in this case orders are procured by sales team of consignor) on his own bill ( Mr X just mentioned the name of principal on his bill) and take the credit of itc on inward supply made by Mr Y from his factories,depot etc

For this sales Mr X also raises a commission bill separately to Mr Y Maharashtra

So what shall Mr X charge when he sales the goods to third party in maharashtra ??

CGST+SGST or IGST

[KASTURI SETHI]

My reply remains the same. The disclosure or non-disclosure of the name of the principal on the invoice issued by the consignment agent is immaterial in this scenario. The agreement is crucial. As per the agreement executed between Y & X, X is an agent (consignment) of Y (principal). This cannot be denied. X is not owner of the goods/consignment in question. The ownership remains with the principal till the delivery to the final buyer. Hence IGST is applicable. This is my view.

[KASTURI SETHI]

The purpose of treating stock-transfer as supply under GST is not to break ITC chain.

[Sachin Malpani]

Dear Sir,

But in this case Mr X (agent) in Maharashtra appointed by Mr Y from Maharashtra

And Mr Y sent goods to agent on stock transfer basis from multiple locations say Delhi punjab hariyana..

Still igst applicable?

And even if igst applicable the question is how Mr X (agent) will show in his R1 gst return..as the third party registered in Maharashtra having gst number in Maharashtra..portal wont take igst..

And in my opinion logically agent should collect cgst+sgst from local sales as the gst is a destination base tax..in this case final sales happened in Maharashtra hence place of supply should be Maharashtra..we cant select the place of supply delhi as the sales is not done to Delhi..

And in first leg of transaction on stock transfer principal already paid igst after that stock was stored in Maharashtra now in second leg of transaction the agent become supplier (supplier includes agent as per sec 2(105)) and he supplies the goods to third party in Maharashtra on his own bill hence 10(1)(a) will applicable..

As per sec 10(1)(b) place of supply will be the place of third person..but the third person should be the ultimate recipient (as it is deemed that the said third person has received the goods). And in this case principal cant be a third person as he is not the recipient..

Pls give your opinion on this..

AI Summary

Place of supply for consignment agent: dispute whether IGST applies or CGST+SGST under the destination rule. The issue concerns whether sales made by a consignment agent in the State, after receipt of stock transferred by an out of State principal, attract IGST under Section 10(1)(b) because the agent acts on behalf of the principal, or instead attract CGST+SGST under the destination principle when the agent invoices and delivers to a local buyer.