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Assessee providing services of 'Marketing/Recruitment/Referral Consultant' do not qualify as Intermediary

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Assessee providing services of 'Marketing/Recruitment/Referral Consultant' do not qualify as Intermediary
CA Bimal Jain By: CA Bimal Jain
June 4, 2024
All Articles by: CA Bimal Jain       View Profile
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The Telangana, AAR in the matter of IN RE: M/S. CENTER FOR INTERNATIONAL ADMISSION AND VISAS (CIAV). [2024 (5) TMI 544 - AUTHORITY FOR ADVANCE RULING, TELANGANA] held that services of 'Marketing/Recruitment/Referral Consultant' by the Assessee to foreign universities on principal to principal basis do not qualify as 'intermediary' as defined under Section 2 (13) of the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”). Further, the activity of forwarding applications of the aspiring students by the Assessee to foreign universities qualifies as 'export of service' in terms of Section 2(6) of the IGST Act provided the payments are received in convertible foreign exchange.


M/s. Center for International Admission and Visas (CIAV) (“the Applicant”) had entered into an agreement with foreign universities to provide referral services. The Applicant provided referrals to the aspirants who wished to apply and study at the universities located outside India.

The Applicant was not bound to refer the students to colleges or universities, in particular. However, the Applicant considered the merits of the aspiring students and particulars of the university, to refer the cases.

It is pertinent to note that the university retained complete discretion about whether to accept a student applicant for enrolment. The Applicant had no authority to accept or guarantee a student application acceptance by the university. Thus, the Applicant worked as an independent contractor providing its own service of ‘marketing/ recruitment/ referral’ to foreign colleges and universities.

The Applicant received referral income or commission from the foreign universities on the basis of the number of successful admissions out of the referrals made by it and does not get any income or commission, as consideration from the prospective students for the execution of its agreement with a foreign university.

Hence, aggrieved by the circumstances, the Applicant opted for an Advance Ruling.


Whether the Assessee providing services of 'Marketing/Recruitment/Referral Consultant' qualify as Intermediary?



  • Observed that, a person would qualify as ‘intermediary’ only if he facilitates the supply of service between two or more persons. A person who provides the service on principal-to-principal basis without facilitating a service between two persons will not be termed as ‘intermediary’.
  • Relied on, the case of M/S. MICROSOFT CORPORATION (I) (P) LTD. VERSUS CST. NEW DELHI. - 2014 (10) TMI 200 - CESTAT NEW DELHI (LB), which was also relied upon by the Bombay High Court in the matter of VODAFONE IDEA LIMITED VERSUS THE UNION OF INDIA THROUGH SECRETARY, DEPARTMENT OF REVENUE, NEW DELHI, THE COMMISSIONER OF CGST AND C. EX MUMBAI, THE DEPUTY COMMISSIONER DIVISION VIII, CGST & C. EX. MUMBAI, THE ASSISTANT COMMISSIONER DIVISION VIII, CGST & C. EX. MUMBAI - 2022 (7) TMI 645 - BOMBAY HIGH COURT wherein it was held that the person who is contractually responsible for making payment for a supply shall be considered as a recipient of such supply. Therefore, in the present case, as per the terms of the underlying agreement, consideration is payable in convertible foreign exchange by the foreign universities for the services rendered to it by the Applicant. There is no mention of any agreement between the Applicant and the students who were referred by it to foreign universities. Even in terms of the agreement, the Applicant cannot have any contractual arrangement with the students for activities that the Applicant has to do for the foreign universities. Therefore, the recipient of the services of the Applicant is the foreign university and not the students.
  • Relied on, on the case of M/S. ERNST AND YOUNG LIMITED VERSUS ADDITIONAL COMMISSIONER, CGST APPEALS -II, DELHI AND ANR. - 2023 (3) TMI 1117 - DELHI HIGH COURT where the petitioner provided professional services in terms of the service agreements to overseas entities, had issued the invoices for the said services directly to EY Entities and had received the invoiced consideration from them, in foreign convertible exchange. The professional services were rendered by the petitioner. The Hon’ble Delhi High Court held that a person who supplies the goods or services is not an intermediary. The services provided by the intermediary only relate to arranging or facilitating the supply of goods or services from the supplier. In the present case, the petitioner does not arrange or facilitate services to EY Entities from third parties. It renders services to them. The petitioner had not arranged the said supply from any third party.
  • Relied on, the case of GENPACT INDIA PVT. LTD. VERSUS UNION OF INDIA AND OTHERS - 2022 (11) TMI 743 - PUNJAB AND HARYANA HIGH COURT wherein Punjab and Haryana High Court held that three conditions must be satisfied to qualify as an intermediary, first, the relationship between the parties must be that of a principal-agent relationship. Second, the person must be involved in the arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. Third, the person must not actually perform the main service intended to be received by the service recipient itself. The scope of an “intermediary” is to mediate between two parties who receives the main service and expressly excludes any person who provides such main service “on his own account”.
  • Relied on, the case of M/S. SNQS INTERNATIONAL SOCKS PRIVATE LIMITED (TRADING DIVISION) VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, COIMBATORE - 2023 (6) TMI 1084 - CESTAT CHENNAI , which has been upheld by the Hon’ble Supreme Court in SLP has held as follows: there are two supplies in case of an intermediary - (i) supply between the principal and the third party and (ii) the supply of his own service to his principal for which he gets paid. In the instant case, there is only one supply by the Applicant to his principal i.e., the foreign client, that too on his account. There is no service provider and service recipient relationship between the Applicant and the vendors who were developed by him as there is no consideration received from these. The supply of goods by these vendors is incidental to the service of the Applicant.
  • Relied on, the CBIC Circular No. 159/15/2021-GST dated September 20, 2021, and the judgment of the Hon’ble Punjab & Haryana High Court, it is imminent that the jurisprudence in Service Tax law should be followed while dealing with the concept of ‘intermediary’ under GST law. It is seen that the issue of ‘intermediary’ with respect to marketing and referral services by Indian service providers to foreign colleges was raised before the CESTAT on multiple occasions in the Service tax regime, wherein the Tribunal categorically held the Indian services providers not be an ‘intermediary’. One such case is M/S SUNRISE IMMIGRATION CONSULTANTS PRIVATE LIMITED VERSUS CCE & ST, CHANDIGARH [2018 (5) TMI 1417 - CESTAT CHANDIGARH] wherein it was held that the appellant was nowhere providing services between two or more persons. In fact, the appellant was providing services to their clients namely banks/colleges/university who were paying commission/fees to the appellant. The appellant was only facilitating the aspirant students and introducing them to the college. If these students get admission to the college, the appellant gets a certain commission which is in nature of promoting the business of the college and for referring investors borrow loan from the foreign bank to the people who wish to settle in Canada if the deal matures, the appellant is getting a certain commission. So, the nature of service provided by the appellant is the promotion of business of their client, in terms, he gets commission which is covered under Business Auxiliary Service which is not the main service provided by the main service providers namely banks/universities. The appellant did not arrange or facilitate the main service i.e. education or loan rendered by colleges/banks. In those circumstances, the appellant cannot be called an intermediary. Based on the decision of Sunrise Immigration Consultants Pvt. Limited, the Tribunal of Hyderabad rendered decisions in case of M/S VALMIKI CONSULTANTS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL TAX, HYDERABAD - 2018 (11) TMI 1085 - CESTAT HYDERABAD and M/S. KRISHNA CONSULTANCY VERSUS COMMISSIONER OF CGST, NAGPUR - 2023 (10) TMI 503 - CESTAT MUMBAI.
  • Observed that, the services of 'marketing/recruitment/referral consultant' are provided by the Applicant to foreign universities on a 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 universities, which is independent of the transactions between the foreign university, and their prospective students. The Applicant cannot be construed to have been facilitating services of the foreign universities to the prospective students as students cannot be construed as service recipients, particularly in the absence of consideration flowing from them to the Applicant. Therefore, the Applicant cannot be considered as an 'intermediary' for the purpose of Section 2(13) of the IGST Act.
  • Noted that, 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 the location of the recipient of its services i.e. location of foreign universities which are outside India. Further, the Applicant and foreign university are not related to each other. Thus, cannot be treated as establishment of a distinct person in accordance with Explanation 1 to Section 8 of the IGST Act. Therefore, the activity of the Applicant for foreign college and university should qualify as 'export of service' in terms of Section 2(6) of the IGST Act provided the payments are received in convertible foreign exchange.

(Author can be reached at [email protected])


By: CA Bimal Jain - June 4, 2024



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