GST payable on Promotion of Courses of Foreign Universities: AAAR [Read Order]

The Appellate Authority for Advance Ruling (AAAR), West Bengal has held that the activity of promotion of courses of foreign universities would be subject to Goods and Services Tax (GST) as the same cannot be treated as ‘export of services.’

In the instant case, the applicant, provides Overseas Education Advisory whereby it promotes the courses of foreign universities among prospective students for which it receives consideration in convertible foreign exchange.

Before the AAR, the appellant claimed that the service provided to the Universities abroad 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 was contended that the service recipient is located outside India and is not an establishment of a distinct person in accordance with Explanation 1 to section 8 of the IGST Act. According to them, the 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.

The authority noted 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,” the authority said.

“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,” it added.