2018 (9) TMI 2013 - Commissioner - GST

Refund claim - intermediary services - whether the rejection has been made in terms of the Legal provisions guiding issuance of LUT under GST? - whether the services in which the Appellant is engaged amounts to Export of services or Intermediary Services? - HELD THAT - In the present case, the services provided by the Appellant located in India to the recipient located outside India in lieu of consideration charged for the said services amounts to supply of services. Now, in order to determine whether the said transaction will be Export of Services, the place of supply of such services must be determined. Section 13 of IGST Act determines the place of supply of services where either the location of supplier or the location of recipient is outside India. Here, default Section 13(2) provides that the place of supply shall be the location of the recipient unless the services falls within the ambit of specified Sections from 13(3) to 13(13) of the IGST Act - In pursuance of Section 13(8)(b)of the IGST Act, 2017, the place of supply of the Intermediary services shall be the location of the supplier of services . In the present case, the appellant is rendering services on behalf of the OCA and not as an independent Service provider. In terms of the aforesaid agreement/MOU, with the OCA, as applicable during the relevant period, the Appellant assists intended people to become students of OCA clients, i.e. foreign Universities/Institutions and for that purpose provides all the necessary information about the course, course fee, minimum Level of English Language proficiency etc., and assists them in completing Admission application forms and its submission with those foreign universities/institution and the services culminate in India prior to travel abroad by the student - Commission is paid to the OCA in respect of each student enrolled through the recruitment agent on the basis of converted leads i.e. on per student basis who takes admission by the foreign University/Institution. Appellant receives consideration from OCA as per terms of MOU. Since the nature of activities or services undertaken by the appellant are as a facilitator, and hence, the Appellant is to be considered as an intermediary in terms of Section 2(13) of the IGST Act. The appellant has failed to observe the provisions of law, so far as the facts of the case are concerned. The contraventions of various provisions of Central Goods and Services Tax Law and the Integrated Goods and Services Tax Law, stand clearly proved against the appellant, as such duty, interest and penalty, as per above provisions of law are held to be recoverable/imposable upon them. The services of the Appellant are not Export of Services under the GST Act and are exigible to tax - appeal dismissed.

Summary

Issues Involved:
1. Jurisdiction of the adjudicating authority.
2. Violation of principles of natural justice.
3. Classification of services as export of services.
4. Classification of services as intermediary services.
5. Acceptance of bond application but rejection of LUT application.
6. Taxability of services.

Issue-wise Analysis:

1. Jurisdiction of the Adjudicating Authority:
The Appellant challenged the jurisdiction of the adjudicating authority, arguing that the impugned order was passed without proper jurisdiction. However, the appellate authority upheld the jurisdiction of the adjudicating authority, indicating that the legal provisions guiding the issuance of LUT under GST were correctly applied.

2. Violation of Principles of Natural Justice:
The Appellant claimed that the impugned order was passed in gross violation of the principles of natural justice as they were not given an opportunity for a personal hearing. The appellate authority noted that a personal hearing was held on 28-8-2018, where representatives for the Appellant reiterated their written submissions and presented case laws. Thus, the claim of violation of natural justice was not upheld.

3. Classification of Services as Export of Services:
The main contention was whether the services provided by the Appellant qualify as export of services under Section 2(6) of the IGST Act. The appellate authority found that the services did not fulfill all the conditions stipulated under Section 2(6), particularly the condition that the place of supply must be outside India. As such, the services were not classified as export of services.

4. Classification of Services as Intermediary Services:
The adjudicating authority classified the services provided by the Appellant as intermediary services under Section 2(13) of the IGST Act. The appellate authority upheld this classification, noting that the Appellant facilitated the supply of services between Indian students and foreign universities, acting as an intermediary rather than an independent service provider. The place of supply for intermediary services is the location of the supplier, which in this case is India, making the services taxable.

5. Acceptance of Bond Application but Rejection of LUT Application:
The Appellant argued that the department's acceptance of their bond application but rejection of the LUT application was contradictory. The appellate authority clarified that the jurisdictional officer is authorized to determine whether the services amount to export or not, as per Circular No. 8/8/2017-GST. The rejection of the LUT application was thus deemed appropriate.

6. Taxability of Services:
The appellate authority concluded that the services provided by the Appellant are taxable under the GST Act. The services were classified as intermediary services, and since the place of supply is India, they are subject to tax. The appellate authority found no infirmity in the impugned order and upheld the decision of the adjudicating authority.

Conclusion:
The appellate authority concurred with the adjudicating authority's decision that the services provided by the Appellant are not export of services under the GST Act and are exigible to tax. The appeal was rejected, and the impugned order was upheld. The Appellant was directed to comply with the applicable tax provisions.