2024 (5) TMI 544 - AAR - GST

Levy of GST - export of services or not - place of supply - Intermediary services or independent service - Marketing/ Recruitment/ Referral Consultant by the Applicant to foreign universities/ colleges on principal to principal basis - HELD THAT - A perusal of the terms of the underlying agreements between the Applicant and foreign colleges and university amply clarifies that the Applicant is not an agent of foreign colleges and university, as it cannot and does not represent itself as an agent or broker or a similar person to enter into a contract, supply or transaction with third party i.e. the prospective students, on behalf of foreign colleges and university. In fact, neither the Applicant has any role or responsibility for services provided by foreign colleges and universities to the prospective students nor it can influence or interfere in the selection process of prospective students thus rendering itself an alien to the arrangement between the foreign colleges and university, and prospective students. The relationship between the Applicant and foreign colleges and university has been defined, impliedly or explicitly, as of principal to principal. It is also clear that the necessary conditions for qualifying as intermediary i.e. presence of three parties and provision of main service with ancillary service by the facilitator acting as an agent or broker, as per Section 2 (13), are not fulfilled by the applicant. The services of marketing/ recruitment/ referral consultant are provided by the Applicant to foreign colleges and university on principal to principal basis, with no contractual relationship with prospective students. The Applicant is providing its main service of marketing/recruitment and referral consultant to the foreign colleges/universities, which is independent of the transactions between the foreign colleges/university, and their prospective students. The Applicant cannot be construed to have been facilitating services of the foreign colleges and university to the prospective students as students cannot be construed as service recipients particularly in the absence of consideration flowing from them to the Applicant. Thus, the Applicant cannot be considered as intermediary for the purpose of Section 2 (13) of IGST Act. In the instant case, the Applicant (Supplier) is located in India while the recipient of services i.e. foreign colleges and university are located outside India. Since, the activity of the Applicant is an independent service of marketing/ recruitment/ referral consultant , the same will fall under Section 13 (2) of the IGST Act to determine its place of supply. Accordingly, the place of supply of the services of the Applicant shall be location of recipient of it services i.e. location of foreign colleges and university which is outside India. The activity of the Applicant for foreign college and university should qualify as export of service in terms of Section 2(6) of IGST Act provided the payments are received in convertible foreign exchange.

Summary

Issues Involved:
1. Qualification as 'intermediary' u/s 2(13) of the Integrated Goods and Services Tax Act, 2017.
2. Liability to GST or qualification as 'export of services' u/s 2(6) of the Integrated Goods and Services Tax Act, 2017.

Summary of Judgment:

Issue 1: Qualification as 'Intermediary'
The Authority examined whether the Applicant's activity of providing services of 'Marketing/Recruitment/Referral Consultant' to foreign universities/colleges on a principal-to-principal basis would qualify as an 'intermediary' u/s 2(13) of the IGST Act. The Applicant has a 'privity of contract' with foreign colleges and universities and works as an independent contractor, receiving referral income or commission based on successful admissions. The Applicant does not have any contractual relationship with the prospective students and does not facilitate the supply of services between the foreign colleges/universities and the students. The Authority relied on various legal precedents and CBIC Circular No. 159/15/2021-GST to conclude that the Applicant is not an 'intermediary' as it provides services on a principal-to-principal basis without facilitating a service between two persons. Therefore, the Applicant should not be considered as an 'intermediary' for the purpose of Section 2(13) of the IGST Act.

Issue 2: Liability to GST or Qualification as 'Export of Services'
The Authority examined whether the Applicant's activity would be liable to GST or would qualify as 'export of services' u/s 2(6) of the IGST Act. The Applicant is located in India, and the recipient of services (foreign colleges/universities) is located outside India. The place of supply of the services is determined to be the location of the recipient, which is outside India. Since the Applicant and the foreign colleges/universities are not related entities, the activity qualifies as 'export of services' provided the payments are received in convertible foreign exchange. Therefore, the activity of the Applicant for foreign colleges and universities should qualify as 'export of services' in terms of Section 2(6) of the IGST Act.

Ruling:
1. The Applicant should not be considered as an 'intermediary' for the purpose of Section 2(13) of the IGST Act.
2. The activity of the Applicant for foreign colleges and universities should qualify as 'export of services' in terms of Section 2(6) of the IGST Act, provided the payments are received in convertible foreign exchange.