Intermediary service classification excludes own-account support services, allowing overseas group service arrangements to qualify as exports.

Intermediary services under the Place of Provision of Services Rules, 2012 require a person to arrange or facilitate a main supply between two or more persons in an agent-like role; a supplier acting on its own account is excluded. The article notes that services rendered on a principal-to-principal basis, including support, technical, manufacturing and administrative services, do not become intermediary services merely because they benefit third parties at the overseas recipient's request. Contractual restrictions on negotiating or concluding sales, together with cost-plus remuneration unrelated to sales, support treatment as own-account services. The services therefore qualify as export of services rather than intermediary services, making service tax demand and penalties unsustainable.

---

---

Issues: Whether the services supplied by the appellant to overseas group entities under the service agreements constituted intermediary services or export of services.

Analysis: Rule 2(f) of the Place of Provision of Services Rules, 2012 requires an intermediary to arrange or facilitate a main supply between two or more persons and to have the character of an agent, broker or similar person. The exclusion for a person supplying services on its own account restricts an expansive application of the definition. The Board clarification recognises that intermediary services require three parties and two distinct supplies, whereas a subcontractor or a supplier rendering the main service on a principal-to-principal basis is not an intermediary. The agreements prohibited the appellant from concluding or negotiating sales contracts and provided for remuneration based on actual costs plus a markup, without linkage to sales. The appellant rendered the contracted support, technical, manufacturing, administrative and related services on its own account; it neither negotiated sales nor merely brought customers and overseas entities together. Services rendered to third parties at the overseas recipient's behest remained services supplied to that recipient, which was contractually entitled to receive them and liable to pay for them.

Conclusion: The appellant was not an intermediary; the services qualified as export of services. The demand of service tax and the penalties were unsustainable.

---