Place of provision of Service

[Guest]

M/s XYZ provides service of Showing Name of his client ( M/s ABC ) on front search page of google. ( When some one makes related search then client name will come on front page )

Where XYZ is in India And ABC is out of India.

What is Place of Provision of Service as per PPS Rules ?

As per Rule 9(C) of PPS -

An 'intermediary' is a person who arranges or facilitates a provision of service between two persons. Thus, an intermediary is involved with two supplies at any one time:

1. the supply between the principal and the third party; and
2. the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged.

Whether Services of XYZ is intermediary service ?

Kindly Guide

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sir,

The place of provision is where M/s XYZ is rendering service in India if it comes under taxable territory.

XYZ will bed the intermediary if his service rendered to M/s ABC is for the purpose of third parties and he collects charges for the same from M/s ABC.

[Guest]

Dear Sir,

XYZ is providing service out of India. XYZ not interacting with third party they only provide services - Getting client name on front page of google at time of making particular search how can we XYZ be intermediary ?

[DR.MARIAPPAN GOVINDARAJAN]

On the facts given by you,M/s XYZ will not be an intermediary.

If XYZ is providing service out of India for a non Indian company then the POP Rules will not attract.

[Guest]

Sir,

As per Intermediary definition if XYZ is falling under definition then POP apply and service will be applicable.

My question is whether XYZ services can be called as intermediary services ?

[DR.MARIAPPAN GOVINDARAJAN]

In my opinion it is not an intermediary service.

[Vinay Sharma]

Dear Mr. Amit,

The Intermediary Services is defined in rule 2 (f) of of PPS Rules as under

"Intermediary means a broker,an agent or any other person, by whatever name called, who arranges or facilitates a provision of service between two or more persons......

In the instant case XYZ is facilitating provision of service between Google and ABC hence it is an Intermediary.

Since XYZ is located in India, the POPs as per rule 9 will be India.

[Guest]

Thank You Sir

[Akash Deep]

Dear experts,

in my view xyz is not acting as an intermediary. an intermediary arrange or facilitate the provision of main service. main service is the service provided by the service provider to the service receiver and not the activity performed by intermediary. the moment activity of intermediary took the colour of main services, such intermediary will be out of the scope of term intermediary. Here, XYZ is providinig advertisement services to ABC. there is no third person who is receiving services from ABC. in absence of third person ABC can not faciliotate the provision of service. in given facts XYZ can never be intermediary.

AI Summary

Place of provision of service: classification as intermediary determines whether the POP rules apply and India is the supply location. The key issue is whether the Indian supplier's activity constitutes an intermediary service: if it merely provides advertising/display services directly to the foreign client without arranging or facilitating a service between the client and a third party, it is not an intermediary and intermediary POP rules do not apply; if it procures or facilitates a third party provider's service for the client, it will be an intermediary and the place of provision will be the supplier's location in India.