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2019 (7) TMI 1105 - AAR - GSTClassification of services - intermediary service or not - Marketing services to be supplied by the Applicant under the Foreign Immigration Advisor to the Consultant Manager - Handholding services to be supplied by the Applicant under the Foreign Immigration Advisor Agreement - export of services or not? Whether the Marketing services to be supplied by the Applicant under the Foreign Immigration Advisor to the Consultant Manager constitutes a supply of Support services classified under SAC 9985 or Intermediary service classifiable under SAC 9961/ 9962 or any other heading? - HELD THAT - For the FB-5 programs there are various such Consultant Managers/ Attorney who specialize in this field in the USA and the applicant will be doing all the process in India on behalf of the Consultant Manager and effectively will be working on his behalf as an agent and hence the applicant's contention that he is providing marketing service on his own is not acceptable. The fact of the matter is that he is providing the intermediary service in the name of marketing service - The consideration for the services rendered by the applicant will be paid upon successful investment/ repatriation by the investor. The applicant does not provide any services on his own but is acting as an intermediary in the subject case. Whether the Marketing services to be provided by the Applicant will be an export of services as defined under Section 2(6) of the Integrated Goods and Services Tax Act 2017? - HELD THAT - The services are provided to the Consultant Manager situated in foreign territory fall in Sections 13(8b) of Section 13 of the IGST Act, 2017. Hence the place of supply of service is within India and therefore the service rendered by the applicant is not export of service as condition (iii) of Section 2(6) of IGST Act is not fulfilled. Whether the Handholding services to be supplied by the Applicant under the Foreign Immigration Advisor Agreement constitute a supply of Support services falling under SAC 9985 or Intermediary service classifiable under SAC 9961 / 9962 or any other heading? - export of services or not - HELD THAT - The applicant is providing intermediary service in the name of hand holding service and not 'support service' as being claimed by the applicant and the said service does not qualify to be an export of service.
Issues Involved:
1. Classification of Marketing Services 2. Classification of Handholding Services 3. Determination of Marketing Services as Export of Services 4. Determination of Handholding Services as Export of Services Issue-wise Detailed Analysis: 1. Classification of Marketing Services: The applicant sought a ruling on whether the marketing services provided under the Foreign Immigration Advisor Agreement to the Consultant Manager fall under "Support services" (SAC 9985) or "Intermediary services" (SAC 9961/9962). The applicant argued that the services are purely marketing-related, involving market surveys, preparing reports, and providing leads without negotiating or concluding contracts on behalf of the Consultant Manager. The applicant emphasized that the services are provided independently and not in a representational capacity. However, the authority determined that the applicant's activities, such as facilitating meetings between the Consultant Manager and prospective investors and assisting in the investment process, qualify as "Intermediary services." The authority noted that the applicant acts as a facilitator between the Consultant Manager and the investors, thus meeting the definition of an intermediary under Section 2(13) of the IGST Act. Consequently, the marketing services were classified as "Intermediary services" under SAC 9985. 2. Classification of Handholding Services: The applicant sought clarification on whether the handholding services provided under the Foreign Immigration Advisor Agreement constitute "Support services" (SAC 9985) or "Intermediary services" (SAC 9961/9962). The handholding services involve assisting investors with documentation and procedural requirements after confirming their investment. The authority concluded that these services also fall under "Intermediary services." The reasoning was that the applicant facilitates the investment process and provides necessary support to ensure the completion of the investment, acting as an intermediary between the Consultant Manager and the investors. Therefore, the handholding services were classified as "Intermediary services." 3. Determination of Marketing Services as Export of Services: The applicant sought a ruling on whether the marketing services provided qualify as an export of services under Section 2(6) of the IGST Act. The applicant argued that the services meet the conditions for export of services, including the location of the supplier and recipient, place of supply, receipt of payment in convertible foreign exchange, and distinct establishments. The authority, however, determined that the marketing services do not qualify as an export of services. The key reason was that the place of supply for intermediary services, as per Section 13(8)(b) of the IGST Act, is the location of the supplier, which is in India. Since the place of supply is within India, the services do not meet the condition of the place of supply being outside India, and therefore, do not qualify as an export of services. 4. Determination of Handholding Services as Export of Services: Similar to the marketing services, the applicant sought clarification on whether the handholding services qualify as an export of services under Section 2(6) of the IGST Act. The applicant argued that the services meet all the conditions for export of services. The authority concluded that the handholding services also do not qualify as an export of services. The reasoning was consistent with the determination for marketing services, where the place of supply for intermediary services is the location of the supplier in India. As the place of supply is within India, the handholding services do not meet the condition of the place of supply being outside India, and therefore, do not qualify as an export of services. Order: 1. Marketing services provided by the applicant under the Foreign Immigration Advisor Agreement are classified as "Intermediary services" under SAC 9985. 2. Handholding services provided by the applicant under the Foreign Immigration Advisor Agreement are classified as "Intermediary services." 3. Marketing services provided by the applicant do not qualify as an export of services under Section 2(6) of the IGST Act. 4. Handholding services provided by the applicant do not qualify as an export of services under Section 2(6) of the IGST Act.
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