2020 (10) TMI 1268 - AAR - GST

Intermediary or not - Overseas Commission Agent - section 2(13) of the IGST Act, 2017 - services received by applicant from the Overseas Commission Agent - import of services or not - requirement to pay GST on RCM basis under section 5(3) of the IGST Act, 2017 on commission paid to the Overseas Commission Agent or not - HELD THAT - Any person who enables the supply of goods/services between two persons, is considered as intermediary. However, where a person is providing services or supplies goods on his own account to his customers, it cannot be termed as an intermediary. As per the agreement dated 31.03.2019, Mr. Bobby Kapoor has to arrange or facilitate the supply of goods of the applicant to international market and in return he shall get the commission on agreed terms - the services received by applicant from the Overseas Commission Agent falls within the meaning of the term 'import of services' as provided under section 2(11) of the IGST Act, 2017. Import of services - HELD THAT - The section 13 of the IGST Act, 2017 specifically deals with place of supply of a service as to whether a service can be termed as import of service or otherwise. On perusal of section 13 of the IGST Act, 2017, we find that the section 13(8) (b) of IGST Act, 2017 is relevant to the issue in hand which provides that the place of supply for the intermediary services would be the location of the supplier of such services (i.e. location of intermediary service provider). Thus the condition (iii) is not satisfied as the place of supply of service is not in India. Levy of GST on RCM basis under section 5(3) of the IGST Act, 2017 - commission paid to the Overseas Commission Agent - HELD THAT - The said section deals with levy and collection of tax i.e IGST and section 5(3) of the IGST Act, 2017 provides that 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. The 'import of services' shall be treated as inter-state supply of services and the same is chargeable to IGST under reverse charge i.e service recipient located within Indian territory has to pay the tax. Since the transaction is related to an intermediary service which is out of the ambit of 'import of services' as discussed in foregoing paras, accordingly we observe that GST under reverse charge is not payable on the same.

Summary

Issues:
1. Whether Overseas Commission Agent is covered within the definition of the term 'intermediary' as provided under section 2(13) of the IGST Act, 2017.
2. Whether services received by the applicant from the Overseas Commission Agent fall within the meaning of the term 'import of services' as provided under section 2(11) of the IGST Act, 2017.
3. Whether the applicant is required to pay GST on RCM basis under section 5(3) of the IGST Act, 2017 on commission paid to the Overseas Commission Agent.

Analysis:
The ruling was sought by M/s Midas Foods (P) Ltd regarding the classification and liability to pay tax on services provided. The application was admitted under Section 97(2)(a) & (e) of the CGST/SGST Act, 2017. The applicant, represented by Shri Ashwarya Sharma, sought clarification on the issues mentioned above.

The applicant, a supplier of goods, entered into an agreement with an Overseas Commission Agent, Mr. Bobby Kapoor, for facilitating international sales. The agreement outlined the roles and responsibilities, commission structure, and effective duration. The MOU detailed the services Mr. Bobby Kapoor would provide, including securing purchase orders and facilitating transactions.

(A) Definition of 'Intermediary': The agreement indicated that Mr. Bobby Kapoor acted as an intermediary in arranging the supply of goods. The legal provisions and agreement supported the conclusion that Mr. Bobby Kapoor fell within the definition of an 'intermediary' as per section 2(13) of the IGST Act, 2017.

(B) Import of Services: The services received from the Overseas Commission Agent did not qualify as 'import of services' as per section 2(11) of the IGST Act, 2017. While conditions (i) and (ii) were met, the place of supply, as per section 13(8)(b) of the IGST Act, was outside India, disqualifying it as 'import of services.'

(C) GST on RCM Basis: The ruling clarified that the applicant was not required to pay GST on a reverse charge basis under section 5(3) of the IGST Act, 2017 on the commission paid to the Overseas Commission Agent. The transaction did not fall under 'import of services,' hence not subject to GST under reverse charge mechanism.

The ruling authority, comprising Shri Anurag Mishra and Shri Amit Gupta, concluded that the Overseas Commission Agent was an intermediary, services did not qualify as 'import of services,' and GST on RCM basis was not applicable. The applicant was not liable to pay GST under reverse charge for the commission paid to the Overseas Commission Agent.