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Intermediary redefined – relevance of Notification 42/2012 lost?

With the final Budget 2014 an amendment was proposed to change the definition of “intermediary”. The new definition introduced the words “…..or supply of goods…” The said definition has been made effective from 1st October 2014. Thus with effect from 1st October 2014 any person who arranges supply of goods between two or more persons is covered in the definition of intermediary.

Place of Provisions of Services Rules 2012 has specific provision for determining the taxability of the intermediary. As per rule 9 of the said rules place of provision of services for intermediary is the location of the service provider. It implied that if intermediary is located outside India then place of provision of service is outside India and thus liability to pay service tax will not rise.

As per notification No 42/2012 dated 29.06.2012 if the prescribed procedure is followed then no service tax is payable on the value of services (upto ten percent of the FOB value of goods exported) provided by the commission agent located outside India for sale caused by him towards goods exported outside India. Now the commission agent is normally the person who facilitates supply of goods between two or more persons.

Thus by combined reading of the above it can be inferred that services provided by the commission agent is not liable to tax and the procedure as prescribed under Notification No 42/2012 is not required to be followed.

Hence, it is understood that the relevance of the notification No 42/2012 dated 29.06.2012 has now lost and hence there is no liability to pay service tax on the commission paid to the commission agent for their services received by exporters for export of goods.

Hope that this article will assist in your Professional endeavors. For any discussion feel free to contact.

Humble Regards

CA Akash Phophalia

(CS, DISA, Certified Indirect Tax course of ICAI, BCOM (HONS), MCOM (F&T)

Office No 203, Amrit Kalash,

Residency Road,

Near Bombay Motor Circle

Jodhpur – 342001

Rajasthan

Email: ca.akashphophalia@gmail.com


 

Published by

AKASH PHOPHALIA
(PROPRIETOR)
Category Service Tax   Report

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