Overseas commission agent services don't qualify as import under IGST Act section 2(11), no reverse charge GST liability

The AAR Uttarakhand ruled that an overseas commission agent facilitating supply of goods to international markets constitutes an intermediary under section 2(13) of IGST Act, 2017. However, since the place of supply for intermediary services is the location of the service provider (overseas) per section 13(8)(b), the services do not qualify as import of services under section 2(11). Consequently, GST on reverse charge basis under section 5(3) is not payable on commission paid to the overseas agent, as the transaction falls outside the ambit of import of services.

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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.

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