CIRCULAR NO-57/2018-CBEC-20/16/4/2018-GST-Scope of Principal-agent relationship in the context of Schedule I of the CGST Act.

Circular No. 57/31/2018-GST

Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing

New Delhi, Dated the 4
th September, 2018


The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners
of Central Tax (All) / The Principal Directors General/ Directors General (All)


Subject: Scope of Principal-agent relationship in the context of Schedule I of the CGST Act -regarding.

In terms of Schedule I of the Central Goods and Services Tax Act, 2017 (hereinafter referred toas the “CGST Act”), the supply of goods by an agent on behalf of the principal without considerationhas been deemed to be a supply. In this connection, various representations have been receivedregarding the scope and ambit of the principal-agent relationship under GST. In order to clarify some ofthe issues and to ensure uniformity in the implementation of the provisions of the law across the fieldformations, the Board, in exercise of its powers conferred under section 168 (1) of the CGST Act herebyclarifies the issues in the succeeding paras.

2. As per section 182 of the Indian Contract Act, 1872, an “agent” is a person employed to do anyact for another, or to represent another in dealings with third person. The person for whom such act isdone, or who is so represented, is called the “principal”. As delineated in the definition, an agent can be
appointed for performing any act on behalf of the principal which may or may not have the potential forrepresentation on behalf of the principal. So, the crucial element here is the representative character ofthe agent which enables him to carry out activities on behalf of the principal.

3. The term “agent” has been defined under sub-section (5) of section 2 of the CGST Act asfollows:


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