Meaning of Intermediary
Section 2(13) of the IGST Act 2017, an intermediary includes broker or an agent or any other person by whatever name called, who arranges or facilitates the supply of goods or services or securities between two or more persons.
Who supplies goods, services or securities on his own account.
Requirements for Intermediary Services
1. Minimum three persons: – An activity between two persons cannot be considered as There must be three persons i.e. two of them transacting in the supply of goods, services or securities i.e. the main supply and third person arranging or facilitating the supply.
2. Two Distinct Supplies:
i. Main Supply between the two principals which can be said to be the supply of goods, services or securities.
ii. Ancillary Supply is the supply which is clearly identifiable and distinguished from the main supply.
A person involved in the main supply on principal to principal basis to another person cannot be considered as supplier of intermediary services.
3. Intermediary has the character of an agent, broker or any other similar person: – The definition of the intermediary uses the expression arranges or facilitates thus it suggests a subsidiary role for the intermediary. The role of intermediary is supportive i.e. it arranges or facilitates some other supply, which is the main supply and does not provide the main supply himself.
4. Intermediary does not include the person if that person supplies goods, services or the securities on his own account: – In case where the person supplies goods, services or the securities on principal to principal basis, the said supply cannot be said to be the supply of the intermediary.
5. Sub-contracting of service is not intermediary service: – The supplier of the main service may decide to outsource the supply of the main service, either fully or partially to one or more sub-contractors. Sub-contractors provide the main supply either fully or partially but does not arranges or facilitates the main supply between the principal and its customers.
Place of supply of the Intermediary Services: – The provisions of place of supply of the intermediary services under section 13 of the IGST shall be invoked only when the location of the supplier of intermediary services or the location of the recipient of intermediary services is outside India.