Dispute of Intermediary in GST Continued

CA Mamta Chopra 22 Sep 2021 3,798 Views 0 comment Print Goods and Services Tax | Articles

Recently circular issued -159/51/2021-GST-Clarification on doubts related to scope of ‘Intermediary’ but I failed to understand doubts cleared or continued…

First of all, Definition of Intermediary –’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.’

Concept of ‘intermediary’ was borrowed in GST from the Service Tax Regime. There is no change in scope of ‘’intermediary services ‘’ in GST REGIME vis –a –vis Service Tax regime as stated in circular.

Man with bill of goods and services tax holding money bill for payment on blue background

Circular talks about only who is intermediary but does not clarify whether services provided by intermediary is export of services or not –dispute continued —–

Several examples given in circular but explained only –Who is intermediary…I.E Who arranges or facilitates the supply of goods or servises i.e third party between two parties but failed to clarify whether intermediary services can be export of services or not ???

Let’s take an example –

A- Manufacturer and Supplier of Machine in India

B- who wants to purchase Machine but living outside India

C- Helps ‘’B’’ in identfying clients –

Here, C is Intermediary and invoice ‘’B’’ in finalizing deal between ‘’A ‘’and ‘’ B’’

C is supplying service outside India so why cant be such services be classified as export of services –

Export of services means the supply of any service when-

Supplier of service located in India –i.e A and C
Recipient of service located outside India- i.e B
Payment for such service received in convertible foreign exchange.
Place of supply of service is outside India – as per Sec 13(8) clause (b) IGST ACT 2017

IN CASE OF INTERMEDIARY SERVICE –PLACE OF SUPPLY –LOCATION OF SUPPLIER

Here, Location of supplier in India so does not qualify export of services

Circular does not clarify regarding above—still disputed and litigation continued—

Conclusion- GST is destination based consumption tax and C is providing service to B –OUTSIDE India, payment also received in convertible foreign exchange then why can t be classified as export of services .So clarification needed regarding above from government otherwise litigation continues–

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