Appellate authority upholds pre-sale services as intermediary services under IGST Act.

The appellate authority upheld the advance ruling that the appellant's pre-sale and marketing services qualify as intermediary services under Section 2(13) of the IGST Act, 2017. The appeal filed by the appellant was dismissed on all counts.

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Issues Involved:
1. Whether the activities carried out by the appellant qualify as "intermediary services" under Section 2(13) of the IGST Act, 2017.
2. Whether the appellant's services are provided on a principal-to-principal basis or as an intermediary.

Issue-wise Analysis:

1. Qualification as "Intermediary Services":
The core issue is whether the appellant's activities qualify as "intermediary services" under Section 2(13) of the IGST Act, 2017. The definition of "intermediary" includes a broker, an agent, or any other person who arranges or facilitates the supply of goods or services between two or more persons but does not include a person who supplies such goods or services on his own account.

The appellant argued that their marketing support services are auxiliary and do not involve negotiating prices or concluding contracts. They maintained a principal-to-principal relationship with Infinera USA, receiving compensation on a "cost plus basis." The appellant contended that their activities do not qualify as those of an "agent" or "broker" and should not be classified as intermediary services.

The appellate authority examined the appellant's "Pre-Sales and Marketing Services Agreement" and the activities performed under it, such as coordinating sales promotion, conducting market research, and providing informational programs. These activities were deemed to facilitate the supply of goods between Infinera USA and its customers in India, thereby fitting the definition of an intermediary.

The authority noted that the appellant acts as a communication and coordination channel between Infinera USA and potential customers in India, which amounts to facilitating the supply of goods. The appellant's role in identifying prospective customers, promoting products, and addressing customer queries were all part of facilitating the supply of products by Infinera USA to customers in India.

2. Principal-to-Principal Basis vs. Intermediary:
The appellant argued that their services are provided on a principal-to-principal basis and not as an intermediary. They cited the agreement, which states that they act as independent contractors and do not have the authority to enter into contracts or bind Infinera USA.

The authority found that despite the agreement's terms, the appellant's actual activities, as outlined in the Bilateral Advance Pricing Arrangement (BAPA), involved facilitating the supply of goods. The appellant's role in promoting products, gathering customer feedback, and acting as a liaison between Infinera USA and customers in India indicated that they were facilitating the supply of goods, not supplying them on their own account.

The authority also distinguished the appellant's case from the GoDaddy India Web Services case, where the services provided were deemed business support services and not intermediary services. The facts in the appellant's case were different, as their activities clearly facilitated the supply of goods between Infinera USA and customers in India.

Conclusion:
The appellate authority upheld the advance ruling that the appellant's pre-sale and marketing services qualify as intermediary services under Section 2(13) of the IGST Act, 2017. The appeal filed by the appellant was dismissed on all counts.

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