The West Bengal Authority of Advance Ruling in case of M/s TERETEX TRADING PRIVATE LIMITED [Advance Ruling No. AD190321001275L, dated 28th June 2021] on application field by applicant passed his ruling after considering the issues involved, on which advance rulings are sought by the applicant, relevant facts and interpretation of law.
Application is filed by M/S TERETEX TRADING PRIVATE LIMITED for advance ruling.
The applicant is going to be engaged in supplying services by way of arranging sales of goods for various overseas manufacturers/ traders at own risk and cost without being appointed as an agent by the supplier or by the recipient of goods
Classification of the services provided by the applicant to its overseas client whether it is Export of service or Intermediary Service?
Place of supply of such service whether mere identification of customers and to connect them with the supplier would result in a supplier of service being classified as an intermediary?
Interpretations of Law:
As defined in clause (13) of section 2 of the IGST Act, 2017
“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;
As defined in clause (6) of section 2 of the IGST Act, 2017 “export of services” means the supply of any service when,––
(i) The supplier of service is located in India;
(ii) The recipient of service is located outside India;
(iii) The place of supply of service is outside India;
(iv) The payment for such service has been received by the supplier of service in convertible foreign exchange; and
(v) The supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;
The supplier of service i.e., the applicant is located in India and the recipient of the service i.e., the overseas supplier of goods to whom the applicant provides services is located outside India thus the nature of activities going to be undertaken by the applicant towards arranging or facilitating the supply of goods envisages the services closely akin to the services provided by an ‘intermediary’.
The applicant can neither change the nature and value of the supply of goods nor hold the title of the goods at any point of time during the entire transaction. The applicant being a supplier of services by way of arranging or facilitating sales of goods for various overseas suppliers and the same is not being done on his own account, satisfies all the conditions to be an Intermediary Service and the services of the applicant by way of arranging sales of goods shall not be considered as ‘export of service.’
The place of supply is determined under section 13 of the IGST Act, 2017 where either location of the supplier or the location of the recipient is outside India. In the present case, the applicant being the supplier of services is located in India and the recipient of services being located outside the country attracts the provisions of the aforesaid section of the Act ibid. We have already discussed that the applicant is found to be an ‘intermediary’.
So, the place of supply shall be determined under subsection (8) of section 13 of IGST Act, 2017 which shall be the location of the supplier of services i.e., in West Bengal for the present case. As a result, the supply shall be treated as an intra-State supply in terms of sub-section (2) of section 8 of the IGST Act, 2017 and tax will be levied accordingly.
The services of the applicant by way of arranging sales of goods shall be considered as ‘intermediary’ as defined under clause (13) of section 2 of the IGST Act, 2017.
Yes, this would result in a supplier of service being classified as an intermediary service having place of supply derived as per section 13 (8) of IGST Act 2017.
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