1. Can a pure agent recieve a full consideration for a good sold in his own account and then transfer the payment after deducting his commission?
2. can a pure agent pay his principal in advance for say 200 quantities of certain goods and then recieve the amount including his commision from the end user after the goods are sold.
Eg of a business model.
Xyz company authorise dealer of Honda two wheelers Enters into agency contract with abc co. to sell their two wheelers for a commission. Abc co wants an arbitrage gain and hence pays in advance to xyz co for say 200 vehicles and fix their price.
However xyz is still the legal owner of the goods.
Now say abc sells 100 goods to end user in the same month and the remaining in the next
Now since Abc has already paid for the goods to xyZ. It wants to show all the arbitrage gain as commission and pay 18% gst.
Is this the correct way of workinng inder pure agent concept.
The case you described is clearly falling under Principal-Agent relationship, No pure agent concept is applicable here.
CAclubindia
