GST Circular No 159/15/2021

Circular 159 focuses on resolving the issue of confusion in the definitions of an intermediary with the help of examples.

Definition of intermediary “Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.” Primary requirements for intermediate service –

1. Minimum three parties

2.Two distinct supplies: There should be two distinct supplies in case of provision of intermediary services;

(1) Main supply, between the two principals, which can be a supply of goods or services or securities.

(2)An Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. This ancillary supply is the supply of intermediary service, and is clearly identifiable, and distinguished from the main supply. A person involved in supply of main supply on principal to principal basis to another person cannot be considered as a supplier of intermediary service.

3.Intermediary service provider to have the character of an agent, broker or any other similar person.

4.Does not include a person who supplies such goods or services or both or securities on his own account.

5. Sub-contracting for a service is not an intermediary service.

6. The specific provision of place of supply of ‘intermediary services’ under section 13 of the IGST Act shall be invoked only when either the location of supplier of intermediary services or location of the recipient of intermediary services is outside India.