2018 (8) TMI 392 - AAAR - GST

Export of services or not? - promotion services - case of Applicant is that they not intermediary and therefore, is not liable to pay service tax in terms of Rule 6A of the Rules, 1994 read with Rule 9 of the said Rules - challenge to Advance Ruling. Held that - Appellant s submission is that the Advance Ruling Authority wrongly considered them as recruitment agent facilitating the recruitment or enrolment of students to Foreign Universities, which is not tenable - The Appellant cannot have the liberty to pick and choose only some portions of the Agreement by saying that such and such clause is not being undertaken by it. The Agreement has to be considered in its entirety. The Appellant in the instant case was free to refer students to Australian Catholic University (ACU) or any other University of its choice. Further, the fee paid to the Appellant was not tied to the promotional activities or expenses incurred to promote Courses of ACU but as a percentage of fee paid by the students who got admitted to ACU - no consideration was paid in spite of incurring expenses by the Appellant for promoting activities of ACU, if no student joined ACU - The Appellant promotes the courses of the University, finds suitable prospective students to undertake the courses, and, in accordance with University procedures and requirements, recruits and assists in the recruitment of suitable students, and hence, the Appellant is to be considered as an intermediary in terms of Section 2(13) of the IGST Act. We are in conformity with the West Bengal Authority for Advance Ruling, that the services of the Appellant are not Export of Services under the GST Act, and are eligible to tax. Appeal dismissed - decided against appellant.

Summary

Issues:
Determining liability to pay goods and services tax on output services - Whether services qualify as 'Export of Services' under the GST Act - Classification of the Appellant as an 'intermediary' of Foreign Universities.

Analysis:
The Appellant, a Private Limited Company promoting courses of Foreign Universities in India, appealed against the West Bengal Authority for Advance Ruling's decision classifying them as an 'intermediary' service provider. The Appellant argued they provided 'business auxiliary services' by marketing and promoting courses, not acting as recruitment agents. They referenced an agreement with Australian Catholic University outlining their responsibilities, emphasizing marketing and promotion activities. The Appellant compared their case to a ruling involving GoDaddy India, highlighting the distinction between providing services on their own account versus as an intermediary.

The Appellant also cited a case involving Sunrise Immigration Consultants, where the Tribunal differentiated between facilitating services and providing the main service. The Tribunal found the Appellant's role to be promoting the business of their clients, not directly providing the main services of education or loans. The Tribunal's interpretation of 'intermediary' under the Place of Provision of Services Rules was discussed, emphasizing the distinction between arranging services and providing them directly.

The Appellate Authority upheld the West Bengal Authority for Advance Ruling's decision, considering the Appellant as an intermediary under the IGST Act. The Authority concluded that the services provided did not qualify as 'Export of Services' under the GST Act and were subject to taxation. The Appeal was dismissed, affirming the original ruling. A copy of the order was directed to be sent to the Appellant for information.