Classification of Marketing & Pre-Sales Technical Support as Intermediary Services under IGST Act

The Authority for Advance Ruling classified the Marketing & Pre-Sales Technical Support Services as "Intermediary services" under Section 2(13) of the IGST Act, 2017, with the applicable HSN Code being 996111. Additionally, the Post-Sales Technical Support Services were classified as Information Technology Support Services under Service Code 998313.

---

---

Issues Involved:
1. Classification of Marketing & Pre-Sales Technical Support Services.
2. Classification of Post-Sales Technical Support Services.

Issue-wise Detailed Analysis:

1. Classification of Marketing & Pre-Sales Technical Support Services:

The applicant, a private limited company registered under GST, sought an advance ruling on whether their Marketing & Pre-Sales Technical Support Services qualify as “Intermediary services” under Section 2(13) of the IGST Act, 2017. The applicant provides these services to its parent company, Ansys US, for customers in India who place orders directly with Ansys US.

The definition of “Intermediary” under Section 2(13) of the IGST Act, 2017, describes an intermediary as someone who arranges or facilitates the supply of goods or services between two or more persons but does not supply such goods or services on his own account. The applicant argued that their role in understanding customer requirements, showcasing software, coordinating for software license agreements, and following up on invoice collections fits this definition, as they facilitate the supply of software by Ansys US to Indian customers without selling the software themselves.

The Authority for Advance Ruling (AAR) agreed with the applicant’s view, stating that the applicant performs all necessary pre-sale coordination work, amounting to facilitation of supply. Consequently, these services are classified under “Intermediary services” as per Section 2(13) of the IGST Act, 2017. The applicable HSN Code for these services is 996111, under “Services provided for a fee or commission or contract basis on wholesale trade.”

2. Classification of Post-Sales Technical Support Services:

The applicant also sought an advance ruling on whether their Post-Sales Technical Support Services fall under HSN Code 998313. These services involve providing 24*7 customer support for troubleshooting and technical queries related to Ansys Software, which is sold by Ansys US to Indian customers. The applicant provides this support through email, telephone, or web support.

The AAR examined the nature of these services and noted that the applicant provides these services on behalf of Ansys US, with the consideration being a percentage of the sales order value. According to Clause (93) of the CGST Act, the recipient of a supply of services is the person liable to pay the consideration. Since Ansys US pays the applicant for these services, Ansys US is considered the recipient.

The AAR referred to Notification No. 11/2017 and the explanatory notes issued by the Central Board of Indirect Taxes and Customs (CBIC). They concluded that Post-Sales Technical Support Services provided by the applicant fall under HSN Code 998313, which covers “Information Technology (IT) Consulting and Support Services.” This classification includes customer support for using or troubleshooting software, upgrade services, and the provision of patches and updates.

Ruling:

1. The Marketing and Pre-sales Technical Support Services provided by the applicant are classified as Intermediary services under Section 2(13) of the IGST Act, 2017.
2. The Post-Sales Technical Support Services provided by the applicant are classified as Information Technology Support Services under Service Code 998313.

---