Intermediary services test: substantive procurement support by an independent contractor was not intermediary supply, and refund failed.

Procurement support services supplied by a foreign entity were held not to be intermediary services under the IGST Act because the entity performed substantive procurement functions on its own account as an independent contractor, rather than merely arranging or facilitating supplies between two other persons. The special place-of-supply rule for intermediary services under section 13(8)(b) was therefore inapplicable, and the transaction was treated as an import of services with place of supply in India. On that basis, the refund claim for IGST paid was rejected, as the taxability challenge failed; the Tribunal noted that refund provisions may apply in appropriate cases, but not on the facts here.

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Issues: (i) Whether the procurement support services rendered by the foreign entity were intermediary services under the IGST Act and whether the place of supply fell within India; (ii) Whether the appellant was entitled to refund of IGST paid on the footing that the transaction was not an import of services.

Issue (i): Whether the procurement support services rendered by the foreign entity were intermediary services under the IGST Act and whether the place of supply fell within India.

Analysis: The arrangement involved three parties and a written procurement agreement, but the services rendered by the foreign entity were held to be substantive procurement services performed on its own account as a centralized procurement hub. The services were not treated as mere facilitation or ancillary supply between two principals. The foreign entity acted as an independent contractor and did not represent or bind the Indian recipient in concluding supplies. Accordingly, the exclusion in the definition of intermediary applied, and section 13(8)(b) of the IGST Act was held inapplicable.

Conclusion: The services were not intermediary services and the place of supply was in India as an import of services.

Issue (ii): Whether the appellant was entitled to refund of IGST paid on the footing that the transaction was not an import of services.

Analysis: Once the services were found to be taxable as an import of services, the refund claim based on the contrary characterization could not succeed. The Tribunal also rejected the objection that the refund application was barred merely because the appellant had initially discharged tax under a mistaken understanding, holding that section 54 and rule 89 contemplate refund claims in appropriate cases. On the facts, however, the refund was not available because the taxability challenge failed.

Conclusion: The refund claim was rejected.

Final Conclusion: The appeals failed on merits, the orders of the first appellate authority were sustained, and the tax demand and refund rejection remained undisturbed.

Ratio Decidendi: A service provider acts as an intermediary only when it merely arranges or facilitates a main supply between two other persons; where the provider supplies substantive procurement services on its own account as an independent contractor, the service is not intermediary and the special place-of-supply rule for intermediary services does not apply.

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