Liability of agent and principal.

Section 86

Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his principal shall, jointly and severally, be liable to pay the tax payable on such goods under this Act.

AI Explanation

1. Agent-Principal Relationship:

   • An agent is someone who acts on behalf of another party, known as the principal. In business, an agent may be involved in various activities, including the supply or receipt of taxable goods.

2. Taxable Goods and Liability:

   • When an agent is involved in supplying or receiving taxable goods on behalf of the principal, both the agent and the principal are held jointly and severally liable for paying the tax on those goods under the relevant tax legislation or Act.

3. Joint and Several Liability:

   • "Joint and several liability" means that both the agent and the principal are collectively responsible for paying the tax. If one party fails to fulfill their obligation, the other party may be held responsible for the entire tax amount. This legal concept is designed to ensure that the government can collect the tax owed, regardless of which party may be more financially capable or easier to pursue.

4. Tax Liability under the Act:

   • The reference to "tax payable on such goods under this Act" indicates that the liability and the relevant tax obligations are governed by a specific legal framework or legislation, often referred to as "this Act." The specifics of the tax rates, rules, and procedures would be outlined in the applicable tax legislation.

In summary, this provision indicates that when an agent is involved in transactions related to taxable goods on behalf of a principal, both the agent and the principal share the responsibility for paying the applicable taxes. The joint and several liability ensures that the government can recover the tax owed, even if one party is unable to fulfill its obligations. It's essential for businesses and their agents to be aware of such provisions to comply with tax regulations and avoid potential legal issues.