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Intermediary Services Under GST Act
It has recently been observed that many companies that make it to our country for the purpose of employment or open up their services may it be a basic BPO or LPO or any other services which have their head operations in another Place but the subsidiary working on behalf takes in India have been hugely targeted.
It is sad that where Chandigarh a Land of Service Class market surrounded by Zirakpur and Mohali are striving hard to get such big players , Chandigarh with no mind of its own bestows the dignity of order with notices to such firms.
Section 2(13) of the IGST act, 2017, “Intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.
The following aspects need to be noted:
- An intermediary arranges or facilitates supply of goods or services or both, or securities between two more persons. For e.g.: Travel Agent
- Two supplies are generally involved:
- Supply between the principal and the third party; and
- Supply of his own service to his principal – generally for a fee or commission;
- An intermediary cannot alter the nature or value of supply, which he facilitates on behalf of his principal;
- The consideration for an intermediary’s supply is separately identifiable from the main supply that he is arranging and is in the nature of fee or commission charged by him;
- The test of agency must be satisfied between the principal and the agent i.e. the intermediary.
When the definition says it’s in bare language it’s hard to state that even then notices by the UT department have been prevailing calling such services as Exports.
While for exports any such company falling in the category of intermediary can’t lie under the end category of export and be fraudulently taxed .
If such cases increase on the fate of this town shall never change making industries shift and unemployment rampant .
The GST Act clubs all intermediaries as ‘agents’ who carries on the business of supply or receipt of goods and/or services on behalf of another and clubs these entities together with commission agents, brokers, etc.
The GST Act clubs all intermediaries as ‘agents’ who carries on the business of supply or receipt of goods and/or services on behalf of another and clubs these entities together with commission agents, brokers, etc.
Section 13 (8) of the IGST Act states that –
The place of supply of the following services shall be the location of the supplier of services, namely :
(a) Services that are supplied by a banking company or a financial institution or a nonbanking financial company to its account holders;
(b) Intermediary services;
(c) Services that consist of hiring of the means of transport up to a period of one month. Such means of transport includes yachts but excludes aircrafts and vessels.
Hence on the basis of above the provisions of section 13 (8)(b) it is pretty clear the place of supply of the intermediary service would be location of the supplier of services.
In order to classify as ‘export of service’, as per section 2(6) of the Integrated Goods and Service Tax Act, 2017, one of the crucial condition as contained under sub-clause (iii) requires that the place of supply of service should be outside India.
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