Services To Foreign University Not Export But Taxable Under GST

Services To Foreign University Not Export But Taxable Under GST

Since there was confusion prevalent on the issue of taxability of such services and whether such services can be considered as export of service or not, M/s Global Reach Education Services Pvt. Ltd. sought an Advance Ruling from Authority for Advance Ruling, West Bengal.

The assessee, known as education agent of the foreign university was an independent contractor and the relationship between such agent and University was neither one of the employer and employee nor one of principal and agent.

It was, therefore, ruled that recruitment services provided to students of foreign University are not covered under export of services and are taxable services under GST. Such services are provided only as a representative of the foreign university and not as an independent service provider. Therefore, place of supply shall be governed by section 13(8) (b) and not by section 13(2) of IGST Act. Place of supply of services shall be the location of the service provider in India and it will not qualify as ‘export’ of service. 

Appellate Advance Ruling (AAAR)

The assessee was not convinced with the ruling and approached Appellate Authority (AAAR) against the ruling of AAR, West Bengal decided by AAAR on 24.07.2018. The AAAR made the following assertions:

(1) When assessee promotes the courses of foreign Universities, finds suitable prospective students to undertake the courses in accordance with University procedures and requirements, recruits and assists in the recruitment of suitable students.

(2) Assessee to be considered as an intermediary in terms of section 2(13) of IGST Act, 2017, more so when he is not paid any consideration for services provided if no student is admitted in the University.

(3) Services provided by University cannot be treated as export of services as per section 2(6) of IGST Act, 2017 and are thus subject to levy of GST.

(4) Definition of ‘intermediary’ under Service Tax and IGST Act are difficult and can not be considered as part material to the earlier definition in place of provision of services Rules, 2012.

(5) Intermediary services may also include ancillary services.

The AAAR thus confirmed the advance ruling pronounced by AAR, West Bengal that the services in question were not ‘export of services’ and were exigible to levy of GST under the GST laws.

CA VASHISHT AMRESH KUMAR
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