Page 107 - GSTL_26th March 2020_Vol 34_Part 4

2020 ] IN RE : INTERNATIONAL FLOWER AUCTION BANGALORE LTD. 617
(a) Agricultural Produce Marketing Committee (APMC) or Board; and (b) a
commission agent for sale or purchase of agricultural produce. It is not a case
that IFAB is considered as an APMC or Board and hence what remains to be de-
cided is whether IFAB is a ‘commission agent’ rendering services for the sale and
purchase of ‘agricultural produce’.
17. The term ‘commission agent’ has not been defined under the GST
law. Rather, Section 2(5) of the CGST Act, 2017 defines ‘agent’ to include a com-
mission agent. The said definition of ‘agent’ reads as under :
“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.
From the above definition it is clear that there are several kinds of mercantile
agents, such as broker, factor, commission agent, Auctioneer, del creder agent,
arhatia etc. The common factor is that all the above types of mercantile agents
carry on the business of supply or receipt of goods and services on behalf of an-
other person. However, the nature of activities done by each of the above-
mentioned agents is different as mentioned below :
Broker : A broker is a mercantile agent who has been appointed to nego-
tiate and enter into a contract for sale or purchase of goods while the
possession and control of the goods is with the principal.
Factor : A factor is a mercantile agent who has the authority to sell or
dispose goods which are in his possession.
Auctioneer : An auctioneer is a mercantile agent who sells goods by way of
public offer to the highest bidder for the principal.
Del Credere : A del credere is a mercantile agent who establishes contract
between his principal and third party. The del credere agent also guaran-
tees to the Principal the performance of the contract by the third party.
Commission Agcnt : A commission agent is one who is appointed by his prin-
cipal to purchase goods in the market on behalf of the principal for which a
commission is charged by the agent.
18. The case of the Appellant is that the services provided by the re-
spondent company - IFAB falls under the category of ‘Auctioneer service’ and
they do not get categorised as a ‘commission agent’. As can be seen from the
above, the nature of activities done by an auctioneer and a commission agent are
fundamentally different even though both perform their functions on behalf of
the principal. The lower Authority has held that IFAB is a commission agent go-
ing merely by the invoices issued by IFAB and by applying the principle laid
down in Board’s Circular No. 57/31/2018-GST, dated 4-9-2018. We find that the
Circular does not have any relevance to the issue at hand. The said Circular clari-
fies the scope of the principal-agent relationship in the context of the Entry No. 3
in Schedule I to the CGST Act. In this case, we are in no doubt that IFAB is an
‘agent’ as defined under Section 2(5) of the CGST Act and their activities are car-
ried out on behalf of the flower growers/sellers. However, the question whether
IFAB is a ‘commission agent’ is what needs to be determined.
19. Going by the nature of activities performed by IFAB, they do not
merely cause the sale of goods on behalf of their clients, the flower grow-
ers/sellers. They undertake the complete process of auction of the flowers and

GST LAW TIMES  26th March 2020  203