Classification and Taxation of Referral Services to Foreign Universities: A Case Study under GST

M/s. Center for International Admission and Visas (CIAV) filed an application in FORM GST ARA-01 under Section 97(1) of the TGST Act, 2017, along with Rule 104 of the CGST/TGST Rules.

The queries raised by CIAV fall under Section 97 of the GST Act. CIAV provided proof of payment for the Advance Ruling fee, paying Rs. 5,000/- under SGST and Rs. 5,000/- under CGST. CIAV confirmed that the questions in the application have not been decided or are pending before any authority under any provisions of the CGST/TGST Act, 2017. After review and a hearing, the application was admitted as per Section 98(2) of the TGST Act, 2017.

Facts of the Case

M/s. Center for International Admission and Visas (CIAV) has agreements with foreign universities and colleges to provide referral services. CIAV refers students who wish to study abroad to these institutions. They prepare and refer to the student’s application based on the student’s merits and the institution’s requirements. CIAV is not obligated to refer students to any specific institution. The final decision to accept a student rest solely with the college or university, as CIAV does not have the authority to guarantee acceptance. CIAV operates as an independent contractor, offering marketing, recruitment, and referral services to foreign educational institutions.

Question Raised

1. The first question seeks to establish whether the Applicant’s services of marketing, recruitment, or referral to foreign universities/colleges should be categorized as those of an “intermediary” as defined under Section 2(13) of the Integrated Goods and Services Tax (IGST) Act, 2017, or as independent services of a marketing/recruitment/referral consultant.
2. The second question addresses whether the Applicant’s activities would be subject to the levy of GST or would qualify as an “export of services” as per Section 2(6) of the IGST Act, 2017. This determination impacts whether the services would be zero-rated for GST purposes.

Personal Hearing

A personal hearing notice was issued for the applicant to appear on April 8, 2024. The Authorized Representatives reiterated the arguments previously submitted with the application.

Additionally, the Authorized Representative/Applicant, M/s. Center for International Admission and Visas (CIAV), Hyderabad, confirmed that no similar case is pending or has been decided under any provisions of the Act in the applicant’s case.

Held

The Applicant’s relationship with foreign colleges and universities is not that of an agent or intermediary. The Applicant does not represent the foreign institutions in dealings with prospective students and has no role in the services provided to or the selection of these students. Instead, the Applicant operates on a principal-to-principal basis with the foreign institutions, providing marketing, recruitment, and referral consultancy services directly to them, without any contractual relationship with the prospective students.

Since the Applicant is based in India and the recipient of its services (the foreign colleges and universities) is located outside India, the place of supply is determined under Section 13(2) of the IGST Act. Consequently, the place of supply is the location of the foreign colleges and universities, which is outside India. Therefore, the Applicant’s services qualify as an “export of service” under Section 2(6) of the IGST Act, provided the payments are received in convertible foreign exchange.