GST refund denied for promotional services to foreign universities as intermediary services under Section 13(8)(b) IGST Act

The Commissioner of GST (Appeals), Chandigarh rejected the appellant's refund claim for tax paid on alleged export of services. While the refund application was filed within the two-year limitation period under Section 54(1) of CGST Act, 2017, the Commissioner held that the appellant's services constituted intermediary services under Section 2(13) of IGST Act. The appellant provided promotional and marketing services to foreign universities as their representative in India, not as an independent service provider. Under Section 13(8)(b) of IGST Act, the place of supply for intermediary services is the location of the service provider, which was India. Since the place of provision was not outside India, the services did not qualify as export of services under Section 2(6) of IGST Act, making the refund claim inadmissible.

---

---

Issues Involved:
1. Whether the refund claims filed by the appellant were time-barred.
2. Whether the services provided by the appellants were covered under "intermediary services" as defined under Section 2(13) of IGST Act and the applicability of Section 13(8)(b) of the IGST Act.

Issue-wise Detailed Analysis:

1. Time-barred Refund Claims:
The appellants contended that they filed the refund claims within the stipulated time, but due to several deficiency memos issued by the authorities, the final submission was delayed. The refund for October 2017 was filed on 31-10-2019, within the two-year limit as per Section 54(1) of the CGST Act, 2017. The appellant argued that the common portal's design, which did not allow filing subsequent refund claims if a deficiency memo was pending, caused delays. The appellate authority agreed with the appellant, holding that the refund claims were not time-barred.

2. Intermediary Services and Applicability of Section 13(8)(b):
The sanctioning authority rejected the refund claims, categorizing the appellant's services as "intermediary services" under Section 2(13) of the IGST Act. The appellant argued that their services were marketing and promotion of foreign universities, not intermediary services. They claimed their activities were akin to a Marketing Agency, providing services on a principal-to-principal basis, and not facilitating a provision of service between two persons.

The appellate authority, however, found that the appellants acted as recruitment agents for foreign universities, facilitating the enrollment of students and receiving commission based on the number of enrollments. This principal service was considered intermediary, with promotion being incidental. The authority concluded that the appellants were intermediaries, as they facilitated the supply of services between foreign universities and students in India.

The definition of "intermediary" under Section 2(13) of the IGST Act includes brokers or agents who arrange or facilitate the supply of goods or services between two or more persons. The appellate authority found that the appellants fit this definition, as they acted as go-betweens for the universities and students.

Citing the Gujarat High Court's decision in Material Recycling Association of India v. Union of India, the authority held that intermediary services provided in India are not considered "export of services" under the IGST Act, 2017. Therefore, the place of supply for intermediary services is the location of the supplier, i.e., in India, as per Section 13(8)(b) of the IGST Act. This means the services provided by the appellants were not "export of services" and were subject to GST.

Order:
The appellate authority upheld the impugned orders on merits, concluding that the services provided by the appellants to foreign universities and students in India were intermediary services, not export of services. Consequently, the place of supply was in India, making the services subject to GST. The refund claims were deemed inadmissible and rejected, though the claims were not time-barred. The appeals were disposed of accordingly.

---