EXPORT OF SERVICES TAXABLE OR NOT, Goods and Services Tax - GST

[PARALIJAYAPALAN ANILKUMAR]

ABC Consultant……, is engaged in the business of counselling and guiding prospective students as well as processing and assisting students to secure admission to various universities and other foreign educational institutions in various countries (FEI, in short)utilizing its knowledge base and other skills pertaining to higher education. ABC provides number of services in the following areas:

Expert Counselling

Preparation of application for various Institutions

Visa Information

Promotional activities

Scholarship Information and Assistance

Educational Loan Assistance

International Travel Assistance

Foreign Exchange Guidance with Forex Guidance

ABC is empaneled with various FEIs; and has an agreement for receiving a fee on successful admission of the student. Similar agreement might have been entered by these FEIswith other similar consultants in India.

Every consultant in India including ABC is aware about maximum number of seats of Indian students (course wise) in a given FEI.

ABC has a data base of prospective students based upon its study and enquiry by the students. Every year, looking at the interest, caliber and financials of the student, ABC shortlistsfew FEIs, with whom he has pre-existing agreement, for that student.

These names are forwarded to the all the respective FEIs, who carries on further admission process of the student.

If the students gets admission from any one of the FEI, ABC becomes eligible for his service charges, which, generally, is based as a percentage of the fee.

On successful admission, ABC gets a remuneration from concerned FEI in convertible foreign exchange.

Question: Whether receipt of such consideration is subject to GST?

Posts / Replies

[Manoranjan Behera]

Hi.

Since the place of supply is inside the territory of India..it does not satisfy the condition specified under Section 2(6)(iii) of IGST ACT. Therefore it cannot be treated as export of service. There is a ruling to this effect from advance ruling authority West Bengal in the case of Global Reach Education Services Pvt Ltd. - 2018 (4) TMI 808 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL

[Amit Agrawal]

Whats constitutes 'intermediary' services - as defined u/s 2 (13) of IGST Act, 2017 - is controversial and open to different interpretation.

U/s 13 (8) (b) of IGST Act, 2017, place of supply of intermediary services is the location of the supplier of services.

Ex-facie, subject services are falling under 'intermediary' services and place of supply of those services is India.

As condition u/s 2 (6) (iii) of the IGST Act, 2017 is not fulfilled, same cannot be called as 'Export of Services'.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

However, in my humble view, these services are neither inter-state supply u/s 7 nor intra-state supply u/s 8 of the IGST Act, 2017 when service-receiver is located outside India. And any interpretation to make it inter-state supply u/s 7 will in-turn make such provision unconstitutional to that extent.

Summarizing above, in my humble view, subject services are not taxable under current GST laws.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Also have a look at the Tribunal decision in the case of Sunrise Immigration. In that case it was held that the services are not intermediary.

Also it would be relevant to look at the terms of the arrangement between the consultant and the FEIs. The conclusion will be dependent on those terms as well.

[Ravinesh Sinha]

I agree with all experts that the subject activity comes under intermediary service and IGST is chargeable as it is treated as inter-state supply in terms of section 7(5)C of IGST

7(5)[c] in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

[KASTURI SETHI]

In this scenario , ABC Consultant is not intermediary service at all.They are just assisting the applicants in different fields. Regarding the taxability, terms and conditions in the agreement will determine.

[Amit Agrawal]

In continuation of my earlier posts here, you may refer to my article on TMI - published on 29.01.2019 - having subject-line as: A view: Why ‘Intermediary Service provided to recipient located outside India’ cannot fall under ‘Inter-State Supply’ and Why IGST is not leviable there against? And alternatively, why such provision treating it as ‘Inter-State Supply’ will be unconstitutional?

Link: https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=8346

As can be seen from posts above from my professional colleagues, what is constitutes 'intermediary' services - as defined u/s 2 (13) of IGST Act, 2017 - is controversial and open to different interpretation. These views explains you the various grounds to defend why your services are not 'intermediary services' and thereby, being zero-rated 'export of services' (presumably, other conditions thereto are being fulfilled).

My posts - shared earlier - deals with your question i.e. receipt of such consideration is subject to GST, where I shared my views about what happens even when subject services are held as 'intermediary' services (i.e. they are not subject to GST under current GST laws). Above-said article will give you some more reasons behind my views.

I do sincerely hope all this helps you in your preparation of defense on multiple grounds.

Ultimately, all these issues are very complex in nature which are open for different interpretations. And various question/s of law involved here, will be eventually settled - one way or other - by Supreme Court of India.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

*Correction in above post:

Please read relevant para as follows:

My posts - shared earlier - deals with your question i.e. whether receipt of such consideration is subject to GST?, where I shared my views about what happens even when subject services are held as 'intermediary' services (i.e. they are not subject to GST under current GST laws). Above-said article will give you some more reasons behind my views.