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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 ..... rmations, the Principal Commissioner of State Tax, Assam, in exercise of its powers conferred by section 168 of the Assam Goods and Services Tax Act, 2017 (hereinafter referred to as the Assam GST Act ), hereby clarifies the issues in succeeding paragraphs. 2. Scope of intermediary services 2.1 Intermediary has been defined in sub-section (13) of section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act ) as under : 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranging 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 ; (1) Main supply, between the two principals, which can be a supply of goods or services or securities ; (2) Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. This ancillary supply is supply of intermediary service and is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases 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 or more sub-contractors. Such sub-contractor provides the main supply, either fully or a part thereof, and does not merely arrange or facilitate the main supply between the principal supplier and his customers, and therefore, clearly is not an intermediary. For instance, A and B have entered into a contract as per which A needs t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 . Illustration 2 : A is a software company which develops software for the clients as per their requirement. A has a contract with B for providing some customized software for its business operations. A outsources the task of design and development of a particular module of the software to C , for which C may have to interact with B , to know their specific requirements. In this case, C is providing main supply of service of des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omer 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 customer care service to A , and therefore, B is not an intermediary. 5. The illustrations given in paragraph 4 above are only indicative and not exhaustive. The illustrations are also generic in nature and should not be interpreted to mean that the service categories mentioned therein are inherently either intermediary services or otherwise. Whether or not, a specific service would fall under intermediary services within the meaning of sub-section (13) of section 2 of the IGST Act, would depend upon the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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