9911796707
TMI BlogClarification in respect of advertising services provided to foreign clientsX X X X Extracts X X X X X X X X Extracts X X X X ..... thereby denying the export benefits to such advertising companies. 1.2 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 Commissioner, in exercise of his powers conferred by section 168 of the West Bengal Goods and Services Tax Act, 2017 (hereinafter referred to as WBGST Act ), hereby clarifies the issues in succeeding paragraphs. 2. Issue in Brief 2.1 A foreign company or firm hires an advertising company/agency in India for advertisement of its goods or services and may enter into a comprehensive agreement with the advertising company/agency encompassing all the issues related to advertising services ranging from media ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as performance-based services as per section 13(3) of the IGST Act? 3. CLARIFICATION: 3.1 Issue 1 -Whether the advertising company can be considered as an intermediary between the foreign client and the media owners as per section 2(13) of IGST Act? 3.1.1 As per section 2(13) of the IGST Act, read with Trade Circular No. 19/2021 dated 30.09.2021, a broker, agent or any other person who arranges or facilitates the main supply of goods or services or both or securities and has not involved himself in the main supply on his own account is considered as intermediary. 3.1.2 In the instant scenario, it is observed that the foreign clients enter into a comprehensive agreement with advertising companies/agencies in India and outsource the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the advertising company is involved in the main supply of advertising services, including resale of media space, to the foreign client on principal-to-principal basis as detailed above and does not fulfil the criteria of intermediary under section 2(13) of the IGST Act. Thus, the same cannot be considered as intermediary in such a scenario and accordingly, the place of supply in the instant matter cannot be linked with the location of supplier of services in terms of section 13(8)(b) of the IGST Act. 3.2 Issue-2 Whether the representative of foreign client in India or the target audience of the advertisement in India can be considered as the recipient of the services being supplied by the advertising company under section 2(93) of the WBGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign client and not the Indian representative of the foreign client based in India or the target audience of the advertisements, as per section 2(93) of the WBGST Act, 2017. 3. 3 Issue-3 Whether the advertising services provided by the advertising companies to foreign clients can be considered as performance-based services as per section 13(3) of the IGST Act? 3.3.1 The place of supply of performance based services is provided in sub-section (3) of section 13 of the IGST Act. The provisions of clause (a) of the said sub-section pertain to the services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services. However, in the instant matter, there does not appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent scenario, the place of supply of the abovementioned advertising services does not appear to be covered under any other provisions of sub-sections (3) to (13) of Section 13 of the IGST Act. Therefore, in view of foregoing discussion, it appears that the place of supply of the said advertising service being supplied by the advertising company to the foreign clients can only be determined as per the default provision, i.e. sub-section (2) of section 13 of the IGST Act, i.e. the place of location of the recipient of the services. Since the recipient of the advertising services in such scenario is the foreign client, who is located outside India, the place of supply of the said services appears to be the location of the said foreign client ..... X X X X Extracts X X X X X X X X Extracts X X X X
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