TaxTMI 
TaxTMI 
Clarification in respect of advertising services provided to foreign clients.
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.... benefits to such advertising companies. 1.2 In view of the difficulties being faced by the trade and industry and to ensure uniformity in the implementation of the provisions of the law across field formations, the Chief Commissioner of State Tax, in exercise of its powers conferred by section 168 of the Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as "GGST Act"), hereby clarifies the issues in succeeding paragraphs. 2. Issue in Brie 2.1 A foreign company or firm hires an advertising company/agency in India for advertisement of its goods or services and may enter into a comprehensive agreement with the advertising company/agency encompassing all the issues related to advertising services ranging from media pla....
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....reign clients can be considered as performance-based services as per section 13(3) of the IGST Act? 3. CLARIFICATION: 3.1 Issue 1 - Whether the advertising company can be considered as an "intermediary" between the foreign client and the media owners as per section 2(13) of IGST Act? 3.1.1 As per section 2(13) of IGST Act, read with Circular no. 159/15/2021-GST dated 14.10.2021, a broker, agent or any other person who arranges or facilitates the main supply of goods or services or both or securities and has not involved himself in the main supply on his own account is considered as intermediary. 3.1.2 In the instant scenario, it is observed that the foreign clients enter into a comprehensive agreement with advertising companies/....
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....3.1.5 In view of above, it is clarified that in the present scenario, the advertising company is involved in the main supply of advertising services, including resale of media space, to the foreign client on principal-to-principal basis as detailed above and does not fulfil the criteria of "intermediary" under section 2(13) of the IGST Act. Thus, the same cannot be considered as "intermediary" in such a scenario and accordingly, the place of supply in the instant matter cannot be linked with the location of supplier of services in terms of section 13(8)(b) of the IGST Act. 3.2 Issue 2 - Whether the representative of foreign client in India or the target audience of the advertisement in India can be considered as the "recipient" of the se....
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....e advertising services provided by the advertising company in such cases is the foreign client and not the Indian representative of the foreign client based in India or the target audience of the advertisements, as per section 2(93) of the GGST Act, 2017. 3.3 Issue 3 - Whether the advertising services provided by the advertising companies to foreign clients can be considered as performance-based services as per section 13(3) of the IGST Act? 3.3.1 The place of supply of performance based services is provided in sub-section (3) of section 13 of IGST Act. The provisions of clause (a) of the said sub-section pertain to the services supplied in respect of goods which are required to be made physically available by the recipient of service....
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....13(3)(a) nor as per the provisions of section 13(3)(b) of IGST Act. 4. Further, it is observed that in the present scenario, the place of supply of the above-mentioned advertising services does not appear to be covered under any other provisions of sub-sections (3) to (13) of section 13 of the IGST Act. Therefore, in view of foregoing discussion, it appears that the place of supply of the said advertising service being supplied by the advertising company to the foreign clients can only be determined as per the default provision, i.e. sub-section (2) of section 13 of IGST Act, i.e. the place of location of the recipient of the services. Since the recipient of the advertising services in such scenario is the foreign client, who is located ....