GST on intermediary service

[Kavali Ramanjeneyulu]

Sir,

One taxpayer located in Hyderabad is providing marketing services as an Intermediary to a Company located in Singapore. As per the Section 13(8) of the IGST act , the place of supply of Intermediary is the location of the Supplier. So, in this case, the place of supply is Hyderabad which is the location of the supplier. In this regard, clarification may please be given as to whether IGST or CGST +SGST is payable on the said intermediary services.

[KASTURI SETHI]

As per FAQ (serial no.25) issued by CBIC, CGST/SGST is applicable. But in my view, as per Section 7(5) read with Section 8(2) of IGST Act, IGST is applicable inasmuch as FAQ has no statutory force. De facto, services have been received in a foreign country and consumed and enjoyed outside India. So better and safer option is IGST.

[Kavali Ramanjeneyulu]

But as per Section 13(8) of the IGST act, place of supply for Intermediary service is the location of the supplier. And as per section 8 (2) of the IGST act , Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply. Accordingly, my view is CGST and SGST is payable as in this case also location of the supplier and place of the supply fall in the same state. Please clarify/comment sir.

[KASTURI SETHI]

When there is a conflict between Sections of the same Act, the department cannot take penal action against you, if you pay IGST or CGST/SGST. I prefer to IGST.

[Kavali Ramanjeneyulu]

Sir, there is no conflict as to the place of supply in regard to the Intermediary service as per Section 13(8) of IGST act . It is the location of the supplier who is in the state of Telangana and Place of the supply is the Location of the supplier. Hence, my view is it is an intra state supply . Please , it is requested to clarify with legal references/case laws sir .

[KASTURI SETHI]

Dear Sir,

There is a judgement in your favour. How the analogy strengthens your view ? You should do the brainstorming ? Although this case law pertains to pre-GST era, yet the ratio/analogy can be applied to the issue raised by you. It will not be litigation free. The issue calls for clarification from Board.

UOI v. Brigadier P.S Gill - 2012 (279) E.L.T. 321 (S.C.) = 2012 (10) TMI 634 - SUPREME COURT

[KASTURI SETHI]

To fall under Section 8(2) of IGST Act i.e. for intra-state supply, it must qualify the conditions laid down under Section 12 of IGST Act. Section 12 is not at all applicable to intermediary services provided by a supplier in India to foreign parties abroad. Section 8(2) would also not be applicable to this present scenario. The present scenario is out of the scope of "Intra-Supply"

Therefore, the present scenario is covered under Section 7(5)(c) of the IGST Act, 2017 attracting IGST.

Section 7 (5) of IGST Act says  Supply of goods or services or both, -

(a) ____________________

(b) ____________________

(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,

shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

[Ganeshan Kalyani]

Clear cut answer given by Sri Kasturi Sir. Thank you Sir.

[Gaurav Narula]

Section 13(8)(b) of the IGST Act - Place of supply shall be location of supplier which is Hyderabad.

Location of supplier shall be 'registered address' i.e Hyderabad

Section 8(2) of the IGST Act - Both location of supplier and place of supply is in same state. Accordingly, it is a local supply on which C + S should be levied.

Regards

CA Gaurav Narula

Reach out to me at [email protected]

[Amit Agrawal]

I agree with reasoning given in various replies earlier that subject transaction is not intra-state supply. And, I am not repeating those reasons here.

But, I also hold view that subject transaction is not inter-state supply either. And I explained my views in my article on this portal: A view: Why ‘Intermediary Service provided to recipient located outside India’ cannot fall under ‘Inter-State Supply’ and Why IGST is not leviable there against? And alternatively, why such provision treating it as ‘Inter-State Supply’ will be unconstitutional?

https://www.taxtmi.com/article/detailed?id=8346

Summarizing above, I am of the view that neither IGST nor CGST & SGST is payable on subject transaction as same is not taxable under current GST laws.

Disclaimer: These are my personal views and should not be construed as professional advice.

AI Summary

GST Dilemma: Marketing Services as Intermediary Raises IGST vs. CGST/SGST Debate Under Sections 13(8) and 7(5) IGST Act. A taxpayer in Hyderabad provides marketing services as an intermediary to a Singaporean company, raising questions about whether IGST or CGST/SGST applies. Section 13(8) of the IGST Act states the place of supply is the supplier's location, suggesting CGST/SGST is applicable since both supplier and supply location are in the same state. However, differing views suggest IGST may apply, citing Section 7(5) of the IGST Act. The discussion highlights the complexity and lack of consensus on whether the transaction is intra-state or inter-state, with some arguing it might not be taxable under current GST laws.