TMI Blog2021 (1) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... are supplying such machineries directly to the end customer and the company is getting commission for being an intermediary, thereby creating Principal- Agent relationship. It is very clear from the facts of transaction that the applicant is acting as an agent of the foreign company and neither providing services nor supplying the goods on their own account - Further, the type of GST to be paid i.e. CGST + SGST or IGST is dependent on type of supply of goods or services provided i.e. intra-state or interstate or imports/exports and also on the place of supply of goods or services. Also, since the recipient of service in the instant case is located outside India as discussed earlier, we feel it necessary to refer to Section 13 of the IGST Act, 2017, which helps in determining the place of supply of services in cases where the location of the supplier of services or the location of the recipient of the services is outside India. Sub-section (2) of Section 13 specifically provides that the place of supply of services except the services provided in sub-sections (3) to (13) shall be the location of the recipient of services provided that where the location of the recipient of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the applicant and the manufacturer and seller of textile sizing/warping equipment M/s. Ukil Machinery Co., Ltd., Republic of Korea, Korea. The salient features of the said agency agreement are as under : Agency Agreement This agreement, made by and between UKIL Machinery Co. Ltd., a corporation organized under the laws of Republic of Korea, located and doing business in the city of Pusan, hereafter called the company and Sagar Agencies Pvt. Ltd. having its principal office in Ahmedabad, India, hereafter referred to as Agent . WITNESSETH Whereas, the company is a manufacturer and seller of textile sizing/warping equipment and desires to secure the services of an agent to promote and negotiate sales of said equipment for the territory described below; and whereas Agent is desirous of securing the right to promote and negotiate sales of said Company's' equipment, it is mutually agreed between said Company and Agent as follows: 1. The equipment to be covered under this agreement includes the 'Company s complete line of sizing warping equipment. 2. The Company agrees to employ said Agent as its exclusive sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper under the circumstances to forward to the inquirer, and shall make available to Agent such sales, products, and technical information and estimates, specifications, and proposals where required, as may be advantageous to Agent in handling the inquiry intelligently and successfully. 10. It is understood that the company shall forward to Agent with dispatch, all inquiries received from the territory herein agreed , for Agent s attention and handling, along with copy of any acknowledgment the Company , may deem proper under the circumstances to forward to the inquirer, and shall make available to Agent such sales, products, and technical information and estimates, specifications, and proposals where required, as may be advantageous to Agent in handling the inquiry intelligently and successfully. 11. All inquiries received by Agent from points or sources outside the territory hereunder, shall be dispatched at once to the Company for attention and handling. 12. Agent shall thoroughly, energetically and regularly represent the Company by circularizing, correspondence, and personal calls on prospective customers for the company's products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring, it appears that the services provided by the applicant are in the nature of services of commission agents or commodity brokers who negotiate between buyers and sellers as a facilitator for the supply of goods for which they are paid a fee or commission. The said service can also be called as intermediary services . 9. In simple terms intermediary can be explained as a firm or a person, etc. who acts as a link between parties for the conduction of business, etc. We find from the submission and terms condition of the agreement that the applicant is providing services as an intermediary. The facts also reveal likewise and therefore we first take up the definition of an intermediary as per GST laws. 10. The term Intermediary is defined in Section 2(13) of IGST Act, 2017 as:- 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. From the above definition we find that an intermediary can be a broker, an agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services: Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs; (b) services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services. (4) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available in the ordinary course of business, the place of supply shall be the location of the supplier of services. In the instant case, the supplier of service is the applicant and the service recipient is M/s. UKIL Machinery Co. Ltd, Republic of Korea. We find that the services provided by the applicant i.e. intermediary services appears at Sub-Section (8)(b) of Section 13. Also, sub-section (8) clearly mentions that the place of supply in respect of the services described under the said sub-section shall be the location of the supplier of services. Further, the supplier in the instant case is the applicant and the location of the said supplier is in Gujarat. Now, since the location of the applicant, who is supplier of services, is in Gujarat and both the supplier of service as well as the place of supply of service is in Gujarat, the supply of services would be considered akin to intra-state supply of services and would be liable to CGST and SGST as per the provisions of Section 9(1) of the CGST Act, 2017. Section 9(1) of CGST Act, 2017 is read as under : 9. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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