The amount passed on to the customer by DCA on account of the early payment before credit period allowed by principal Whether any supply arises in this transaction?

PJ/Advance Ruling/2018-2019/30

Facts- The applicant is a Del Creder Agent (DCA) of Supplier of Goods. The applicant takes order from the customers and places these orders with the Principal (actual supplier of goods to customers and receiver of payments). Collection of payment from customers is the responsibility of DCA.
Normally, Principal takes Bank Guarantee (BG) and / or Security Deposit against which principal assigns certain limit to the DCA in their system. Within that limit, DCA is allowed to place orders of the customers. At the end of the month, for the orders booked through DCA and goods supplied by the principal, DCA gets the commission from principal for which DCA raises invoices on the principal along with GST.

Decision- 1.The amount passed on to the customer by DCA on account of the early payment before credit period allowed by principal as referred in Para 8 of Sr. No. 12 (B) of the application (para 1.8 above). Whether any “supply” arises in this transaction? Who is the supplier and receiver in the transaction?
Ans-The additional bonus passed on by the applicant (DCA) to the customer, is not in nature of a supply in accordance with GST Act, 2017.

2. If yes, what will be the classification of such Supply and its HSN/SAC Code and applicable GST Rate?- NA

3. If the transaction is termed as “Supply”, whether the aforementioned supply is exempted from Goods and Service Tax under CGST Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017, applicable w.e.f. 01.07.2017, as amended from time to time and corresponding Raj. GST Notification issued by Government of Rajasthan or any other notifications/rules under GST law? - NA

4. If GST is charged by the customer on invoice for such transaction, Whether the dealer/DCA can take credit of the ITC of the GST charged on such supply considering the fact that dealer has outward supply as(i) Commission Agent Service on which GST is paid @ 18% (ii) the Finance in terms of Loan and advance on which interest income arises which is exempt under CGST Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017, applicable w.e.f. 01.07.2017, as amended from time to time and corresponding Raj. GST Notification issued by Government of Rajasthan?
Ans- Since, the said transaction is not a supply by the customer; invoice cannot be raised/issued by the customer and if any amount passes on to the DCA in any manner, the DCA is not entitled to take ITC of the said amount passed on by the customer.

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PJ/Advance Ruling/2018-2019/30

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