This circular provides clarification on the scope of “intermediary services” under the IGST Act to address interpretational issues and ensure consistent application of the law.

It explains that the concept of intermediary under GST is largely unchanged from the earlier service tax regime, except for inclusion of securities. An intermediary is a person who arranges or facilitates the supply of goods, services or securities between two or more persons, but does not supply such goods or services on his own account. Accordingly, intermediary services necessarily involve a minimum of three parties and two distinct supplies, namely the main supply between the principals and the ancillary supply of facilitation by the intermediary.

The circular clarifies that a person supplying goods or services on a principal-to-principal basis cannot be treated as an intermediary. Further, sub-contracting of services does not fall within the scope of intermediary services, as a sub-contractor provides the main service on its own account and does not merely facilitate a supply between two other parties.

Illustrative examples are provided to distinguish intermediary services from principal supplies and sub-contracting arrangements. The circular also clarifies that the special place of supply provisions for intermediary services apply only where either the supplier or recipient is located outside India. Each case must be examined based on its specific facts and contractual arrangements