The West Bengal Authority for Advance Ruling, recently held that the intermediary services provided to foreign universities would attract Goods and Services Tax ( GST ).
M/S Global Reach Education Services Pvt Ltd, providing Overseas Education Advisory whereby it promotes the courses of foreign universities among prospective students had approached the authority for a ruling on whether the service provided to the Universities abroad is to be considered as “export of service” and, therefore, a zero-rated supply under the CGST / WBGST Act 2017.
Before the authorities, the Company argued that it is providing the above services to the foreign universities, for which it receives consideration in convertible foreign exchange. The service recipient is located outside India and is not an establishment of a distinct person in accordance with Explanation 1 to section 8 of the IGST Act. The place of supply of the services is outside India in terms of section 13(2) of the IGST Act. The supply of services by the applicant should, therefore, be treated as export of service within the meaning of section 2(6) of the IGST Act.
It further contended that it is not providing any intermediary service since it is provisioning service of promotion of the university courses among the prospective students and receives consideration for it as an independent service provider.
After hearing the submissions from both sides, the authority noted that the main service provided by the applicant is facilitating recruitment of students and the consideration is paid as commission on the basis of course fee and recruitment through the applicant.
“The Applicant is facilitating recruitment/enrolment of students to foreign Universities. Promotional service is incidental and ancillary to the above principal supply and the Applicant is paid consideration in the form of Commission, based on performance in recruiting students, as a percentage of the tuition fee collected from the students enrolled through the Applicant. The Applicant, therefore, represents the University in the territory of India and acts as its recruitment agent. In fact, Clause 2.1 of the Background forming part of the Agreement clearly says, “The University engages the Education Agent to be its representative to perform the Services from the commencement date in the Territory and on the terms set out in this Agreement until the Expiry date.” It is, therefore, clear that whatever services the applicable provisions are provided only as a representative of the University and not as an independent service provider.”
It was, therefore, held that being an intermediary service provider, the place of the Applicant’s supply shall be determined under section 13(8)(b) of the IGST Act and not under section 13(2) of the IGST Act.
Since the place of supply under the above legal framework is the territory of India and the condition under section 2(6)(iii) of the IGST Act is not satisfied, the authority held that the applicant-Company is liable to pay GST for the services provided by them.
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