11 May 2024
dear sir/maam I am a student of CA Intermediate My query is that the language both the sections 22 (turnover based registration) and 24 (compulsory registration) of CGST act,2017 indicate towards schedule 1 para 3 agents as CBIC has clarified that wherever the phrase "on the behalf of principal" is present it is to be interpreted as sch 1 para 3 agents however the circular does not mention anything specifically about "taxable supplies on behalf of taxable persons".
So which type of agents are referred to in section 22:- 1) if they are sch1 para 3 agents then section 22 and 24 conflict with each other 2) if they are not sch1 para 3 agents then section 22 and CBIC's clarification conflict with each other.
please guide and correct if I am incorrect in my understanding
10 July 2024
Your query relates to the interpretation of Sections 22 (voluntary registration based on turnover) and 24 (compulsory registration) of the Central Goods and Services Tax (CGST) Act, 2017, specifically in relation to agents mentioned in Schedule I, Paragraph 3 (sch 1 para 3).
Schedule I, Paragraph 3 of the CGST Act deals with situations where a person acts as an agent to another person and any supply made by such agent on behalf of the principal shall be deemed to be a supply by the principal. This implies that the agent's supplies are treated as supplies of the principal for GST purposes.
Now, addressing your specific points:
1. **Type of Agents Referred to in Section 22:** - Section 22 of the CGST Act pertains to the registration of persons making taxable supplies of goods or services or both if their aggregate turnover exceeds the threshold limit specified. - The term "agents" in Section 22 does not explicitly refer to Schedule I, Paragraph 3 agents. Instead, it generally applies to any person who is liable to be registered under GST due to their turnover exceeding the threshold limit. - Section 22 and Schedule I, Paragraph 3 serve different purposes: - Section 22 focuses on the turnover threshold for registration irrespective of whether the person acts as an agent or not. - Schedule I, Paragraph 3 deals specifically with the treatment of supplies made by agents on behalf of principals for GST purposes.
2. **Conflict Between Sections 22 and 24:** - Section 24 mandates compulsory registration under certain circumstances, which includes situations specified under Schedule I, Paragraph 3. - While Schedule I, Paragraph 3 clarifies the treatment of supplies by agents, it does not directly conflict with Section 22. Section 22 primarily concerns the turnover threshold for registration, while Section 24 outlines conditions where registration is mandatory. - The clarification provided by CBIC (Central Board of Indirect Taxes and Customs) regarding agents under Schedule I, Paragraph 3 is to ensure that supplies made by agents are attributed to the principal for GST purposes. This clarification helps in determining the liability for GST on such supplies.
In conclusion, for your understanding: - Section 22 deals with turnover-based registration, applying to any person whose aggregate turnover exceeds the specified limit, regardless of whether they are acting as agents. - Schedule I, Paragraph 3 deals with the GST treatment of supplies made by agents on behalf of principals, ensuring that such supplies are attributed to the principal for GST purposes.
There isn't a direct conflict between Section 22 and CBIC's clarification regarding agents under Schedule I, Paragraph 3. They serve different purposes within the GST framework, with Section 22 focusing on registration thresholds and Schedule I, Paragraph 3 clarifying the treatment of supplies made by agents.
If you have further doubts or need clarification, it's advisable to consult the CGST Act itself and seek guidance from your mentors or professional advisors to ensure accurate interpretation and application of GST laws.
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