Circular No. 159/15/2021-GST dated 20.09.2021

It has clarified the scope of ‘Intermediary services’ under the GST regime. The concept of intermediary having been borrowed from the erstwhile Service Tax Regime is defined under section 2(13) of the IGST Act to mean a broker or agent or any other person who arranges or facilitates supply of goods or services or both or securities between two or more persons.

Group of People Message Talking Communication GST UPDATE

Key Essentials of Intermediary Services

  • Minimum Requirement of three Parties– Supplier & recipient transacting in the supply of goods or services or securities i.e main supply and the intermediary facilitating the same.
  • Two Distinct Supplies– One is the ‘main supply’ between the principals and another is ‘ancillary supply’ which is the supply of intermediary services.
  • Character of agent, broker or any other similar person – The definition of intermediary under section 2(13) is not inclusive but exclusive to mean a ‘broker’, ‘an agent’ or ‘any other person’ similarly situated. The role of the intermediary is subsidiary in nature i.e only to facilitate or arrange main supply.
  • Exclusion from dealing in main supply– An intermediary does not include persons undertaking main supply on their own account either fully or partly.
  • Exclusion of sub-contracting for services – Where the supplier of main service sub-contracts either fully or partly the supply of such service; the sub-contractor dealing in main supply would not be considered as an intermediary.


The Circular provides some generic insight into the basic characteristics of intermediaries under the GST Regime. However, no particular class of services have been notified that will qualify as intermediary services within section 2(13) of IGST Act. Hence, recognition of intermediary is to be construed based on the terms of the contract and the facts of the individual case.

Circular No. 160/16/2021-GST dated 20.09.2021

It has provided some key clarifications against some specific queries vis-à-vis CGST provisions. The same are being summarized below for easy reference:

Issue 1: Which of the following dates are relevant to determine the ‘financial year’ for the purpose of section 16(4)-date of issuance of debit note, or date of issuance of debit note or date of issuance of underlying invoices?

Clarification– With effect from. 01.01.2021, in case of debit notes, the date of issuance of debit note (not the date of underlying invoice) shall determine the relevant financial year for the purpose of section 16(4) of the CGST Act.

Issue 2: Whether any availment of input tax credit, on or after 01.01.2021, in respect of debit notes issued either prior to or after 01.01.2021, will be governed by the provisions of the amended section 16(4), or the amended provision will be applicable only in respect of the debit notes issued after 01.01.2021?

Clarification– The availment of ITC on debit notes in respect of amended provision shall be applicable from 01.01.2021. Accordingly, for availment of ITC on or after 01.01.2021, in respect of debit notes issued either prior to or after 01.01.2021, the eligibility for availment of ITC will be governed by the amended provision of section 16(4), whereas any ITC availed prior to 01.01.2021, in respect of debit notes, shall be governed under the provisions of section 16(4), as it existed before the said amendment on 01.01.2021.

Issue 3: Whether carrying a physical copy of invoice is compulsory during movement of goods in cases where suppliers have issued invoices in the manner prescribed under rule 48 (4) of the CGST Rules, 2017 (i.e. in cases of e-invoice).

Clarification–  There is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier as per rule 48(4) of the CGST Rules and production of the Quick Response (QR) code having an embedded Invoice Reference Number (IRN) electronically, for verification by the proper officer, would suffice.

Issue 4: Whether the first proviso to section 54(3) of CGST / SGST Act, prohibiting refund of unutilized ITC is applicable in case of exports of goods which are having NIL rate of export duty.

Clarification– Only those goods which are actually subjected to export duty are covered under the restriction imposed under section 54(3) from availment of refund of accumulated ITC. Goods, which are not subject to any export duty and in respect of which either NIL rate is specified in Second Schedule to the Customs Tariff Act, 1975 or which are fully exempted from payment of export duty by virtue of any customs notification or which are not covered under Second Schedule to the Customs Tariff Act, 1975, are not to be covered by the restriction imposed under the first proviso to section 54(3) of the CGST Act for the purpose of availment of refund of accumulated ITC.

Circular No. 161/17/2021-GST dated 20.09.2021

It has clarified that supply of services by a subsidiary/sister company/group concern etc. of a foreign company, which is incorporated in India under the Companies Act, 2013 to the establishments of the said foreign company located outside India (incorporated outside India), would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act 2017 for being considered as export of services, as it would not be treated as supply between merely establishments of distinct persons under Explanation 1 of section 8 of IGST Act 2017 .

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