TMI BlogClarification on doubts related to scope of “Intermediary”X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of the scope of Intermediary services in the GST Law. The matter has been examined. In view of the difficulties being faced by the trade and industry and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act ), hereby clarifies the issues in succeeding paragraphs. 2 . Scope of Intermediary services 2.1 Intermediary has been defined in the sub-section (13) of section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as IGST Act) as under Intermediary means a broker, an agent or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facilitates the supplies of goods or services or securities between two or more persons. It is thus a natural corollary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (the main supply) and one arranging or facilitating (the ancillary supply) the said main supply. An activity between only two parties can, therefore, NOT be considered as an intermediary service. An intermediary essentially arranges or facilitates another supply (the main supply ) between two or more other persons and, does not himself provide the main supply. 3.2 Two distinct supplies: As discussed above, there are two distinct supplies in case of provision of intermediary services; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch goods or services or both or securities on his own account . Use of word such in the definition with reference to supply of goods or services refers to the main supply of goods or services or both, or securities, between two or more persons, which are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies the main supply, either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of intermediary . 3.5 Sub-contracting for a service is not an intermediary service: An important exclusion from intermediary is sub-contracting. The supplier of main service may decide to outsource the supply of the main service, either fully or partly, to one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a manufacturer and supplier of a machine. C helps A in selling the machine by identifying client B who wants to purchase this machine and helps in finalizing the contract of supply of machine by A to B . C charges A for his services of locating B and helping in finalizing the sale of machine between A and B , for which C invoices A and is paid by A for the same. While A and B are involved in the main supply of the machinery, C , is facilitating the supply of machine between A and B . In this arrangement, C is providing the ancillary supply of arranging or facilitating the main supply of machinery between A and B and therefore, C is an intermediary and is providing intermediary service to A . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices. Accordingly, in this case, Q acts as an intermediary as per definition of sub-section (13) of section 2 of the IGST Act. Illustration 4 A is a manufacturer and supplier of computers based in USA and supplies its goods all over the world. As a part of this supply, A is also required to provide customer care service to its customers to address their queries and complains related to the said supply of computers. A decides to outsource the task of providing customer care services to a BPO firm, B . B provides customer care service to A by interacting with the customers of A and addressing / processing their queries / complains. B charges A for this service. B is involved in supply of main service custome ..... X X X X Extracts X X X X X X X X Extracts X X X X
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