Promotional & Enrolment of Students Services provided to foreign
universities are considered as “export of services” under Section 2(6) of the
IGST Act & Taxable under GST
Ruling
Authority: West Bengal Authority for Advance Ruling
(WBAAR)
Case Number: 05
of 2018 Date of Order: 02
/WBAAR/ 2017-18
Applicant: Global
Reach Education Services Pvt Ltd
Summary of Case: Global
Reach Education Services Pvt Ltd provides promotional services for foreign
universities to prospective students in India. They receive consideration in
convertible foreign exchange. The applicant sought clarification on whether
these services should be classified as "export of services" under
Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act),
thereby qualifying for a zero-rated supply under the CGST/WBGST Act 2017.
Relevant Sections:
·
Section 2(6) of the IGST Act: Defines
"export of services."
·
Section 13(2) of the IGST Act: Specifies
the place of supply of services for export.
·
Section 13(8)(b) of the IGST Act:
Determines the place of supply for intermediary services.
·
Section 97(2)(e) of the GST Act: Allows
for advance rulings on the classification of services.
Questions Raised by the
Applicant:
1.
Whether the services provided to foreign
universities are considered as “export of services” under Section 2(6) of the
IGST Act?
2.
If the services qualify as an export,
would they be zero-rated under the GST Act?
Submission by Applicant:
·
The applicant argued that it is providing
a direct promotional service rather than acting as an intermediary.
·
The applicant receives payment in
convertible foreign exchange from foreign universities.
·
The service recipient (foreign university)
is outside India, and the place of supply of the services is also outside India
according to Section 13(2) of the IGST Act.
·
The applicant contended that it should not
be classified as an intermediary service and, hence, its services should
qualify as an export under Section 2(6) of the IGST Act.
Findings by Authority:
·
The Authority found that despite the
applicant’s argument, the primary service provided is facilitating the
recruitment/enrollment of students to foreign universities, with promotional
activities being ancillary.
·
The agreements reviewed show that the
applicant is compensated based on recruitment performance, indicating that the
principal service is recruitment facilitation, not merely promotional.
·
The applicant's role, as outlined in the
agreements, aligns with that of an intermediary or recruitment agent rather
than an independent service provider.
Final Ruling:
·
The services provided by the applicant do
not qualify as "Export of Services" under Section 2(6) of the IGST
Act.
·
The services are considered taxable under
the GST Act.
·
This ruling is valid subject to the
provisions under Section 103(2) until and unless declared void under Section
104(1) of the GST Act.
Disclaimer: All the
Information is based on the notification, circular and order issued by the
Govt. authority and judgement delivered by the court or the
authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
Click here
