QUESTION

Insertion of Sl.12AA in Not.9/2017-IGST by 20/2019 w.e.f. 01.10.2019 exempting services provided by intermediary when location of both supplier and recipient of goods is outside India. Does this mean, such services provided by an intermediary located in India when both supplier and recipient of GOODS is outside India (Foreign countries) is taxable for the period from 01.07.2017 to 30.09.2019? If so, at what rate, under which HSN, which rate notification.

ANSWER

FACTS OF THE CASE:
Sl.12AA was inserted in Not.9/2017-IGST by 20/2019 w.e.f.01.10.2019 exempting services provided by intermediary when location of both supplier and recipient of goods is outside India. Whether services provided by an intermediary located in India when both supplier and recipient of GOODS is outside India (Foreign countries) is taxable for the period from 01.07.2017 to 30.09.2019?

LAW APPLICABLE:
Sub section (8) of section 13 of IGST dictates that:
The place of supply of the following services shall be the location of the supplier of services, namely:''

(a) services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders;

(b) intermediary services;

(c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month."

Notification No. 12/2017 Central Tax (rate): 12AA inserted wef 01.10.2019

12AA

Heading 9961

Services provided by an intermediary when location of both supplier and recipient of goods is outside the taxable territory.

Nil

Following documents shall be maintained for a minimum duration of five years:
1) Copy of Bill of Lading

2) Copy of executed contract between Supplier/Seller and Receiver/Buyer of goods

3) Copy of commission debit note raised by an intermediary service provider in taxable territory from service recipient located in nontaxable territory

4) Copy of certificate of origin issued by service recipient located in nontaxable territory

5) Declaration letter from an intermediary service provider in taxable territory on company letter head confirming that commission debit note raised relates to contract when both supplier and receiver of goods are outside the taxable territory';

INTERPRETATION:

POS in case of intermediary as per section 13(8)(b) is location of intermediary i.e. in India, therefore services provided by intermediary where location of supplier or location of recipient is outside India is taxable in India.

However wef 01.10.2019 Services provided by an intermediary when the location of both supplier and recipient of goods is outside the taxable territory is exempted vide Notification No. 20/2019 Central tax (rate) dt. 30.09.2019.

CONCLUSION:
Intermediary services when the location of both supplier and recipient of goods is outside the taxable territory is taxable for the period from 01.07.2017 to 30.09.2019 under HSN code 9985 taxable @ 18%. (Reply dt. 07/10/2021)