Meaning of ‘pure agent’ :
For the purposes of Valuation Rules, “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 provided 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.
Illustration – Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to Registrar of the Companies. The fees charged by the Registrar of the companies registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the payment of those fees. Therefore, A’s recovery of such expenses is a disbursement and not part of the value of supply made by A to B.