The Hon’ble Uttarakhand Authority for Advance Rulings (UAAR), in the matter of M/s. Midas Foods (P.) Ltd. [Application No. 05 of 2020-21 dated October 15, 2020], held that Overseas Commission Agent is covered within the definition of the term ‘intermediary’ under Section 2(13) of the Integrated Goods and Services Tax Act, 2017 (the IGST Act). Service received by the assessee from Overseas Commission Agent do not fall within the meaning of term ‘import of services’ under Section 2(11) of the IGST Act as place of supply is outside India, hence the assessee is not required to pay GST on Reverse Charge Mechanism (RCM) basis under Section 5(3) of the IGST Act on commission paid to Overseas Commission Agent. (OCA)
M/s. Midas Foods (P.) Ltd. (“the Applicant”) is a supplier of goods and carries on business of supply of seasoning, spices, premixes and similar food products to its customers located within and outside India. The Applicant entered into an agreement with OCA located outside India to arrange supply of the Applicant’s goods outside India.
For such facilitation, the Applicant would pay commission to OCA, ranging from 10-15% on the basis of Free on Board (“FOB”) value of the consignment exported outside India.
The Applicant has sought an advance ruling on classification and determination of liability to pay tax on supply of services.
The Hon’ble Uttarakhand Authority for Advance Rulings (“AAR”) in Application No. 05 of 2020-21 dated October 15, 2020, held as under:
Section 2(11) of the IGST Act:
“(11) ‘‘import of services” means the supply of any service, where––
(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India.”
Section 2(13) of the IGST Act:
“(13) “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.”
Section 5(3) of the IGST Act:
“Levy and collection
5(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.”
Section 13(8)(b) of the IGST Act:
“Place of supply of services where location of supplier or location of recipient is outside India.
13(8) The place of supply of the following services shall be the location of the supplier of services, namely:––
(b) intermediary services.”
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