Intermediary service classification for commission-based facilitation makes the supply taxable in India under forward charge

Commission-based facilitation by an agent for foreign principals and Indian customers constitutes intermediary service, because arranging and facilitating supplies for consideration falls within the statutory definition. The place of supply is the supplier's location, so the service is taxable in India under forward charge. On the facts, export of services does not attract IGST under reverse charge because the applicant is the supplier, not the recipient, and reverse-charge IGST on import of services is therefore not payable. As no reverse-charge levy arises, no input tax credit issue survives on that basis.

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Issues: (i) Whether the applicant's export of services attracts IGST under reverse charge mechanism. (ii) Whether the services rendered by the applicant constitute intermediary services. (iii) Whether IGST under reverse charge mechanism is payable and available as input tax credit in the facts of the case.

Issue (i): Whether the applicant's export of services attracts IGST under reverse charge mechanism.

Analysis: Reverse charge shifts the tax liability to the recipient. On the facts found, the applicant itself is the supplier of the services in question, and the question of levy on export of services under reverse charge does not arise.

Conclusion: The applicant's export of services does not attract IGST under reverse charge mechanism.

Issue (ii): Whether the services rendered by the applicant constitute intermediary services.

Analysis: The applicant acted as an agent for the foreign principals, arranged and facilitated sales to Indian customers, and earned commission or fixed consideration for such facilitation. Such activity falls within the statutory definition of intermediary, and the place of supply of intermediary services is the location of the supplier. The supply is therefore taxable in the taxable territory under forward charge.

Conclusion: The services rendered by the applicant constitute intermediary services and are taxable under forward charge mechanism.

Issue (iii): Whether IGST under reverse charge mechanism is payable and available as input tax credit in the facts of the case.

Analysis: IGST under reverse charge for import of services arises only where the applicant is the recipient of such services. The facts found show that the applicant is not importing services, so the levy does not arise. Accordingly, the question of input tax credit on such payment does not arise.

Conclusion: IGST under reverse charge mechanism does not arise in the applicant's case, and no input tax credit issue survives on that basis.

Final Conclusion: The ruling answers the first question in the applicant's favour, but holds that the applicant's commission-based facilitation activity is intermediary service taxable in India, and that reverse-charge IGST on import of services is not attracted on the facts.

Ratio Decidendi: A person who, as an agent, arranges or facilitates supplies between foreign principals and Indian customers is an intermediary, and the place of supply of such services is the supplier's location, making the supply taxable in the taxable territory under forward charge.

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