Page 97 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : FOM ALUMINIUM MACHINES PVT. LTD. 423
applicant furnished copy of “Agency Agreement” dated 1-1-2012,
which shall be automatically renewed from year to year unless ter-
minated one month before the expiration date by written notice. It is
observed from the agreement that the applicant is the sole agent of
their parent company for the SAARC area and gets the commission
for sale orders booked. Therefore the applicant is undoubtedly is an
agent of the parent company under this type of transactions.
(b) The applicant also entered “Agency Agreement” with M/s. Univer-
sal Pack s.r.l (Supplier), Italy, primarily to promote and develop the
sale of machines produced by supplier for the markets in SAARC
area. The applicant furnished the copy of said agreement dated 1-9-
2018 which shall be automatically renewed from year to year unless
terminated one month before the expiration date by written notice.
It is observed from the agreement that the applicant receives a tax
included lump sum payment of 48,000 Euros per annum, to be paid
quarterly 12,000 Euros. The applicant, in addition to this, also gets a
commission of 5% on the first five machines sold.
The applicant entered the said agreement wherein they have been
referred to as a Partner. The “Partner”, under the terms & condi-
tions of the agreement, is an agent without exclusive of the supplier
for the SAARC area and is authorised to enter the market using the
“Universal Pack India” brand on all commercial media used such as
letterhead, business cards, website etc. Therefore the applicant is
undoubtedly an agent of the supplier under this type of transac-
tions.
6.6 Now we proceed to examine whether the aforesaid business activi-
ties get covered under Intermediary Services or not. As per Section 2(13) of the
IGST Act, 2017, “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 per-
son who supplies such goods or services or both, or securities on his own ac-
count. Further, as per Section 13(8)(b) of the IGST Act, 2017, the place of supply
of “intermediary services” shall be the location of the supplier of services.
In the instant case the applicant acts as an agent, in terms of the aforesaid
agreements, to the parent company Fom Industrie s.r.l, Italy as well as M/s. Uni-
versal Pack s.r.l, Italy beyond doubt. Therefore the supply of services of the ap-
plicant under these transactions squarely falls under the Intermediary services
and thereby the supply is in the taxable territory and thus the said supply is tax-
able, under forward charge mechanism.
6.7 Now we proceed to examine the third question which reads as “Is
IGST paid under RCM eligible for ITC?” The levy of IGST is only on the inter-State
supplies and importation of goods/services is treated as inter-State supply, in
terms of Section 7(2)/7(4) of the IGST Act, 2017 respectively. The IGST is levied
on import of goods, as part of customs duty, and collected under the Customs
Act, 1962. The IGST paid on clearance of imported goods by the applicant is
available for ITC to the applicant. Further import of services attract IGST and the
concerned importer has to discharge the said levy under RCM, which is also
available for ITC to the importer of services. In the instant case the applicant is
not importing any services and hence payment of IGST under RCM does not
arise.
GST LAW TIMES  23rd April 2020  217