By TIOL News Service

KOLKATA, APRIL 17, 2018: THE Applicant provides Overseas Education Advisory whereby it promotes the courses of foreign universities among prospective students.

The applicant seeks a ruling on whether the service provided to the Universities abroad for which it receives consideration in convertible foreign exchange is to be considered "export" within the meaning of "Section 2 (6) of the Integrated Goods and Services Act, 2017 and, therefore, a zero - rated supply under the CGST / WBGST Act 2017".

It is submitted that the service recipient is located outside India and, therefore, place of supply of the services is outside India in terms of section 13(2) of the IGST Act; that 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. - Furthermore, it is provisioning service of promotion of the university courses among the prospective students and receives consideration as an independent service provider and, therefore, it is not providing any intermediary service. Inasmuch as the place of supply should, therefore, be determined under section 13(2) and not under section 13(8)(b) of the IGST Act. That is to say, the place of supply should be the location of the recipient outside India and accordingly its service to the foreign universities should be treated as export within the meaning of section 2(6) of the IGST Act.

The Authority reproduced the definition of "Export of Services" as contained in Section 2 ( 6 ) of the IGST Act, 2017 and observed that in the case of Export of Services, all the conditions as mandated therein are to be followed in totality "without any violation and that there is no scope for partial compliance."

Referring to the various clauses of the Agreement, 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.

Furthermore, while providing the above service, the applicant is subject to audit ?by the University under clause 9.2 of the Agreement, which includes fulfilling recruitment - targets; that the Applicant cannot claim any consideration - for its promotional activity unless the students get enrolled through it; that if the students get enrolled directly by the University through distant education or online services, the Applicant - will not be paid any consideration whether or not it has provided any promotional service; that the Applicant is not allowed to undertake any - promotional or advertising activity without prior written approval from the University; that a part from the consideration received from the University, "the Applicant is not allowed to receive any fees or charges from the students or deduct anything from the charges or fees payable by the students to the University."

On consideration of the above material facts, the Authority observed -

++ It is evident from the above discussion that 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 applicant provisions are provided only as a representative of the University and not as an independent service provider.

++ 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. The place of supply under the above legal framework is the territory of India. As the condition under section 2(6)(iii) of the IGST Act is not satisfied, the Applicant's service to the foreign universities does not qualify as " Export of Services", and is, therefore, taxable under the GST Act.

RULING:

The services of the applicant are not "Export of Service" and are taxable under the GST Act.

(See 2018-TIOL-06-AAR-GST)