Published on: 8 September 2023 at 11:01 IST
Court: High Court of Delhi
Citation: Ernst & Young Ltd. V. Commr. (CGST) (2023)
Honourable High Court of Delhi has held that Section 2(13) of the Integrated Goods and Services Tax Act, 2017 does not considers the branch office of Foreign Entity as an Intermediary. It is held that any business conducted by the Branch Office of Foreign Entity on behalf of the head office to their client would be considered as Export of Service which is exempted under the Integrated Goods and Services Tax Act, 2017 subject to certain provisions.
23. It is apparent that the Adjudicating Authority has interpreted the last limb of the definition of ‘intermediary’ under Section 2(13) of the IGST Act as controlling the definition of the term. We are unable to agree with this interpretation. The limb of Section 2(13) of the IGST Act reads as “but does not include a person who supplies such goods or services or both or securities on his own account” but this does not control the definition of the term ‘intermediary’; it merely restricts the main definition.
The opening lines of Section 2(13) of the IGST Act expressly provides that an intermediary means a broker, agent or any other person who “arranges or facilitates supply of goods or services or both or securities between two or more persons”. The last line of the definition merely clarifies that the definition is not to be read in an expansive manner and would not include a person who supplies goods, services or securities on his own account.
There may be services, which may entail outsourcing some constituent part to a third party. But that would not be construed as intermediary services, if the service provider provides services to the recipient on his own account as opposed to merely putting the third party directly in touch with the service recipient and arranging for the supply of goods or services.
Drafted By Abhijit Mishra