Marketing and promotional activities for parent company constitute intermediary services not composite supply under GST

AAAR held that appellant's marketing and promotional activities for parent company Sabre APAC constituted intermediary services rather than composite supply. Appellant identified potential subscribers for Sabre System, facilitated subscription processes, and arranged supply of online information database access services between Sabre APAC and Indian subscribers. Court determined appellant acted as agent, playing essential role in service supply chain by identifying recipients and facilitating transactions. Without appellant's involvement, no supply would occur as there would be no Indian recipients. Activities were primarily intermediary in nature. AAAR declined ruling on place of supply and export classification, citing lack of jurisdiction on these issues.

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Issues Involved
1. Whether the services provided by the Appellant qualify as intermediary services under the GST Act.
2. Determination of the place of supply for the services provided by the Appellant.
3. Whether the services provided by the Appellant qualify as export of services under the GST Act.
4. Classification of the services provided by the Appellant as a composite supply.

Detailed Analysis

1. Intermediary Services
The Appellant argued that their services should not be classified as intermediary services under Section 2(13) of the IGST Act. They contended that their activities were performed on a principal-to-principal basis, and they did not facilitate the supply of goods or services between two parties. However, the judgment concluded that the Appellant's activities, such as identifying potential subscribers, initiating the subscription process, and providing marketing support services, facilitated the supply of OIDAR services provided by Sabre APAC to the subscribers. Thus, the Appellant was acting as an intermediary.

2. Place of Supply
The Appellant contended that the place of supply for their services should be outside India, as the recipient of the services (Sabre APAC) was located in Singapore. However, the judgment noted that determining the place of supply falls outside the jurisdiction of the Advance Ruling Authority as per Section 97(2) of the CGST Act. Therefore, the place of supply was not conclusively determined in this judgment.

3. Export of Services
The Appellant argued that their services should qualify as export of services under Section 2(6) of the IGST Act, which would make them zero-rated supplies. They claimed that they met all the conditions for export of services, including the location of the supplier and recipient, receipt of payment in convertible foreign exchange, and the principal-to-principal nature of the agreement. However, the judgment could not address this issue due to the lack of jurisdiction to determine the place of supply, which is a prerequisite for deciding whether a service qualifies as an export.

4. Composite Supply
The Appellant argued that their services should be classified as a composite supply under Section 2(30) of the CGST Act, with the principal supply being marketing and promotion services. The judgment agreed that the services provided by the Appellant could be considered a composite supply, but held that the principal supply was intermediary services. All other activities such as advertising, PR, and promotional activities were deemed ancillary or incidental to the principal intermediary service.

Conclusion
The judgment concluded that the Appellant's services constituted a composite supply, with intermediary services being the principal supply. The determination of whether these services qualify as export of services was not addressed due to jurisdictional limitations.

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