2019-VIL-77-ALH

SGST AAAR

GST – Karnataka AAAR - Intermediary, Intermediary Service, Export of services, Place of Supply - Airbus France has entered into an “Intra-Group Services Agreement” with the Appellant in terms of which the Appellant is required to perform Procurement Operations and Procurement Transformation & Central Services functions - Whether gamut of services rendered by the appellant to its foreign Head Office would be construed as intermediary service under Section 2(13) of the CGST Act, 2017 - Authority of Advance Ruling held that the services rendered by the Appellant in terms of the ‘Intra-Group Services Level Agreement’ would be classified as those of an ‘Intermediary’ and not export of services – aggrieved party in appeal – HELD - although in common parlance there may seem to be similarity in the terms Broker, Agent and Intermediary do not form any category or class nor do they constitute a genus under the legal provisions of the GST Act - the principle of ‘ejusdem generic’ cannot be made applicable in interpreting the phrase ‘any other person’ used in the definition of intermediary - the phrase ‘any other person, by whatever name called’ is to be interpreted so as to include persons who are not necessarily similar to ‘broker’ or ‘agent’ - an intermediary is a person between the supplier and the recipient who arranges or facilitates such supply and is given a consideration for this activity - The entire gamut of the activities carried out by the appellant with the ultimate aim of assisting their Principal to procure a supply of goods from Indian vendors - the Appellant’s role is nothing but arranging or facilitating a supply between two persons i.e. between the Indian supplier and Airbus France - the Appellant renders a service to Airbus France in arranging for the main supply between two principals i.e. the Indian supplier and Airbus France, to take place. Therefore, the activity of the Appellant is nothing but an intermediary service – the above findings are also supported by the Board Circular No 159/15/2021 GST dated 20.09.2021 which clearly states that the concept of intermediary requires a minimum of three parties, two of them transacting in the supply of goods or services or securities and one arranging or facilitating the said main supply – further, the Appellant is not supplying such goods on its own account and hence, the Appellant does not fall within the ambit of the exclusion contained in the definition of ‘intermediary’ – the order passed by the Advance Ruling Authority is upheld and the appeal filed by the appellant is dismissed - Supply on its own account - It is the contention of the Appellant that the services being provided to Airbus France are on their own account and they are not engaged in supplying services on behalf of the Principal – there does not seem to be any difference between the meaning of the term “intermediary” under the GST regime and pre-GST regime - In the pre-GST regime, an intermediary referred to a person who facilitates the provision of a main service between two or more person but did not include a person who provided the main service on his account. Similarly, in the GST regime, an intermediary refers to a person who facilitates the supply of goods or services or both between two or more persons but excludes a person who supplies such goods or services or both on his own account - The phrase ‘such goods or services’ used in the definition of ‘intermediary’ implies that the person should not be supplying on his risk and reward entirely, the very goods or services whose supply he is arranging or facilitating. In the instant case, the Appellant is arranging for and facilitating the Principal in procuring a supply of goods from India - The service of facilitating the main supply of goods between the Indian supplier and the Principal is provided by the Appellant to Airbus France. The Appellant is not supplying such goods on his own account and hence, the Appellant does not fall within the ambit of the exclusion contained in the definition of ‘intermediary’. Therefore, the Appellant is clearly playing the role of Intermediary for Airbus France, as envisaged under Section 2(13) of the IGST Act, 2017 - Principle of ‘ejusdem generic’ - the principle of ‘ejusdem generic’ cannot be made applicable in interpreting the phrase ‘any other person’ used in the definition of intermediary - Ejusdem generis is a canon of statutory construction where, when general words follow the enumeration of particular cases of things, the general words will be constructed as applying to things of the same general class as those enumerated. In the case of the definition of ‘intermediary’ as per Section 2(13) of the IGST Act, we have already mentioned that the terms ‘broker’ and ‘agent’ are fundamentally different. It would not be proper to use the terms Broker or Agent or Intermediary, interchangeably, as these terms have completely different essence and characteristics. The words agent, and broker (used in definition of the word ‘intermediary’ in the IGST act) are only in the broad construct of being an intermediary or a representative but are not substitutes for each other. Further, ‘agent’ and ‘intermediary’ are entirely two different concepts in so far as the GST Law is concerned, as is evident from the fact that the “Agent” and “Intermediary” are separately defined under CGST Act and IGST Act respectively, having their own meanings assigned to them. Therefore, although in common parlance there may seem to be a proximity and similarity in the terms Broker, Agent and Intermediary, they do not form any category or class nor do they constitute a genus under the legal provisions of the GST Acts. When such is the case, the phrase ‘any other person, by whatever name called’ cannot draw its colour from the preceding words which are altogether different

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