Valuation of Supply in case of Agents and Pure Agent Concept in GST
1. Value of supply of goods made or received through an agent

• Open market value of goods being supplied, or

At the option of supplier 90% of the price charged for the supply of goods of like kind and quality by the recipient from his unrelated customers.
In this case the value of supply shall be 110 or 90% of Rs. 120 ie. Rs 108 at the option of supplier.

1. Value of supply shall be cost of supply plus 10% mark-up, if not determinable through above mentioned clauses
2. If we are not able to find value of supply by these clauses, then the value shall determined by using reasonable means consistent with principles & general provisions of GST law.

2. Value of supply of services in case of a Pure Agent
The expenditure and costs incurred by the supplier as a pure agent of the recipient of supply of service, are excluded from the value of supplyand thus also from aggregate turnover:
Who is a Pure Agent:
A pure agent means a person who:

• enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or
  costs in the course of supply of goods or services or both
• neither intends to hold nor holds any title to the goods or services or both so procured or provided as pure agent of the recipient of supply
• does not use for his own interest such goods or services so procured
• receives only the actual amount incurred to procure such goods or services in addition to the amount received for the supply he provides on his own account
• The payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service

Pure Agent concept has been enumerated by an Example given below
Example A

• A CA firm is engaged in handling Taxation of his client ABC Ltd.
• Now suppose the firm has paid Assessment Tax on Behalf of its client ABC Ltd.
• While charging the consideration from ABC Ltd. , the CA firm will also recover the assessment tax paid on its behalf.
• Assessment Tax was compulsorily levied on ABC Ltd. & the CA Firm wasmerely acting as a pure agent in the payment of those fees.
• Therefore the tax portion will not form part of the supply & thus no G.S.T. will be levied on that.

Example B

• A is an importer and B is a Custom Broker.
• A approaches B for customs clearance work in respect of an import consignment.
• The clearance of import consignment and delivery of the consignment to A would also require taking service of a transporter.
• So A, also authorizes B, to incur expenditure on his behalf for procuring the services of a transporter and agrees to reimburse B for the transportation cost at actuals.
• In the given illustration, B is providing Customs Brokers service to A, which would be on a principal to principal basis.
• The ancillary service of transportation is procured by B on behalf of A as a pure agent and expenses incurred by B on transportation should not form part of value of Customs Broker service provided by B to A.

Example C

• Similarly Port fees, Port charges, Custom duty, dock dues, godown charges, freight etc. paid by Customs Broker orC&F agent on behalf of owner of goods form part of pure agent services thus excluded from value of supply.

The relevant provisions of Central Goods & Service Tax rules 2017 has been provided below for your reference:

Rule 29 of the Central Goods & Service Tax rules 2017
Value of supply of goods made or received through an agent.-The value of supply of goods between the principal and his agent shall
(a) be the open market value of the goods being supplied, or at the option of the supplier, be ninety percent. of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person, where the goods are intended for further supply by the said recipient.
(b) where the value of a supply is not determinable under clause (a), the same shall be determined by the application of rule 30 or rule 31 in that order.
Rule 30 of the Central Goods & Service Tax rules 2017
Value of supply of goods or services or both based on cost.-Where the value of a supply of goods or services or both is not determinable by any of the preceding rules of this Chapter, the value shall be one hundred and ten percent of the cost of production or manufacture or the cost of acquisition of such goods or the cost of provision of such services.
Rule 31 of the Central Goods & Service Tax rules 2017
Residual method for determination of value of supply of goods or services or both.-
Where the value of supply of goods or services or both cannot be determined under rules 27 to 30, the same shall be determined using reasonable means consistent with the principles and the general provisions of section 15 and the provisions of this Chapter:
Provided that in the case of supply of services, the supplier may opt for this rule, ignoring rule 30.
Rule 33 of the Central Goods & Service Tax rules 2017
Value of supply of services in case of pure agent.-Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,-
(i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient;
(ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and
(iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.
Explanation.- For the purposes of this rule, the expression pure agent means a person who
(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;
(b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply;
(c) does not use for his own interest such goods or services so procured; and
(d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.