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TMI Blog2024 (5) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- under SGST and Rs. 5,000/- under CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided nor are pending before any authority under any provisions of the CGST/TGST Act' 2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98 (2) of TGST Act' 2017. 4. BRIEF FACTS OF THE CASE: M/s. Center for International Admission and Visas (CIAV) has entered into agreements with foreign universities/ colleges to provide referral services. Broadly, under the scope of services, the Applicant provides referrals of the aspirants/ applicants who wishes to apply and study aboard to the universities/ colleges located outside India. The Applicant is responsible to prepare the case of the aspiring student and refer it to the concerned foreign college and university, as per the requirement of the aspiring student and the fitment to the college/ university. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or them. (b) The role of the Applicant is specific and of expertise, based on its experience with Indian markets. The Applicant is responsible to prepare the case of the aspiring student and refer it to the concerned foreign college and university, as per the requirement of the aspiring student and the fitment to the foreign college and university. (c) The Applicant is not bound to refer student to a college or university, in particular. On the contrary, the Applicant after considering the merits of the aspiring student and particulars of the college/ university, refers the case. (d) The foreign college and university retain full and complete discretion about whether to accept a student applicant for enrolment. The Applicant has no authority to accept an applicant or guarantee a student applicant's acceptance by the foreign college and university. (e) The Applicant receives referral income or commission from foreign college and university on the basis of number of successful admissions out of the referrals made by it. (f) The Applicant does not get any income or commission, as consideration from the prospective students for execution of its agreement with foreign coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird party; and (b) The supply of his own services of agency to his principal, for which a fee or commission is usually charged. 7.5. In this manner, 'intermediary' is a broker, an agent or any other person, who facilitates or arranges services between two or more persons, while the main service is performed by the service recipient of intermediary's services. It is pertinent to mention that a person would qualify as 'intermediary' only if he facilitates the supply of service between two or more person. A person who provides the service on principal to principal basis without facilitating a service between two persons will not be termed as 'intermediary'. 7.6. CBIC in its para 3 of the Circular No. 159/15/2021-GST dated 20.09.2021 clarifies as follows: "3. Primary Requirements for intermediary services The concept of intermediary services, as defined above, requires some basic prerequisites, which are discussed below: 3.1 Minimum of Three Parties: By definition, an intermediary is someone who arranges or facilitates the supplies of goods or services or securities between two or more persons. It is thus a natural corollary that the arrangement requires a minimum of three pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplies the main supply, either fully or partly, on principal-to-principal basis, the said supply cannot be covered under the scope of "intermediary." 7.7. The Punjab & Haryana High Court in the matter of Genpact India (P) Ltd. v. Union of India 2023 (68) GSTL 3 (P&H) while deciding on the issue of 'intermediary' under GST law has held as follows: "28. As per definition of "intermediary" under Section 2 (13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an "intermediary"; 29. First, the relationship between the parties must be that of a principal-agency relationship. Second, the person must be involved in 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. Scope of an "intermediary" is to mediate between two parties i.e. the principal service provider (the 3rd party) and the beneficiary (the agents principal) who receives the main service and expressly excludes any person who provides such main service "on his own account"..." 7.8. Similar views were held by the Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant has not entered into any agreement with the vendors either on their own or on behalf of the overseas client. 12.3. In this case, the Applicant is found to be providing services of design and product development essentially for its foreign client to keep track of updates in fashion trends in knitted goods, evaluation and development of vendors, including quality monitoring and logistics and operational assistance. The Applicant has not engaged any other service provider for the process of procuring the specific goods to be exported as per the requirement of his foreign client. All these services are rendered only to M/s. Primark, Dublin, Ireland on his own account and he is receiving the consideration for the services as a percentage of FOB value of the merchandise exported. There is no evidence on record to show that he is receiving any consideration from the vendors developed by him and as such, the services could not be termed as falling under the category of "intermediary"." 7.10. The concept of 'intermediary' in GST law is same as the one under Service tax law and so is the respective legal position. CBIC in its circular has clarified: "2.2 The concept of 'intermedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... university who are paying commission/fees to the appellant. The appellant is only facilitating the aspirant student and introduced them to the college and if these students gets admission to the college, the appellant gets certain commission which is in nature of promoting the business of the college and for referring investors borrow loan from foreign based bank to the people who wishes settled in Canada on that if the deal matures, the appellant is getting 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/university. As the appellant did not arrange or facilitate main service i.e. education or loan rendered by colleges/banks. In that circumstances, the appellant cannot be called as intermediary." 7.13. Based on the decision of Sunrise Immigration (supra), Tribunal has rendered decisions in case of Valmiki Consultants Pvt. Ltd. v. Commissioner of Customs, Central Tax Hyderabad 2019 TIOL 674 CESTAT HYD and Krishna Consultancy v. Commissioner of CGST, Nagpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders namely foreign colleges and university. As the applicant did not arrange or facilitate main service i.e. education by foreign colleges and university. In that circumstances, the applicant cannot be called as an intermediary. 7.16. In another perspective, the Applicant has been hired by foreign colleges and university to provide its expertized services of marketing and referral, which otherwise could not be effectively conducted by foreign colleges and university in Indian territory because of social, regional and economic factors or lack of requisite competence. Thus, the Applicant can be considered to be performing outsourced service of marketing and referral by foreign colleges and university, which is squarely outside the ambit of 'intermediary' as mentioned in foregoing paragraphs. At the same time, foreign colleges and university are providing their main service of education and admission thereto to prospective students which is an independent activity to the underlying agreement between the Applicant and foreign colleges and university. 7.17. As for the aspect of mode of payment of consideration paid on success basis, it is only a mode for execution of the terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s establishment of a distinct person in accordance with Explanation 1 to Section 8 of IGST Act. 7.21. Therefore, 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. 8. In view of the foregoing, we rule as follows: In view of the above discussion, the questions raised by the applicant are clarified as below: Questions Ruling 1. Whether in view of the given facts and circumstances the activity of providing services of 'Marketing/Recruitment/ Referral Consultant' by the Applicant to foreign universities/ colleges on principal to principal basis would qualify as 'intermediary' as defined under Section 2 (13) of the Integrated Goods and Services Tax Act, 2017 or whether the same would be considered as an independent service of 'Marketing/Recruitment/ Referral Consultant' by the Applicant to foreign universities/ colleges? and/ or No, in view of the discussion above, the Applicant should not be considered as 'intermediary' for the purpose of Section 2 (13) of the IGST Act. 2. Whether in view of the given facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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