Service Given Under Promotional Scheme Is Not ‘Supply’ Under GST: AAR

The applicant, Eduguide Overseas Studies Private Limited, is a consulting firm that is engaged in the business of doing contracts with foreign universities across different countries, where it provides students to the university from their consulting firm for education and foreign courses on their campus. The applicant, in return, earns a commission from the universities.

The applicant also offers guidance to Indian students regarding the admission process, for which it charges an amount from the students. The firm sometimes also runs promotional offers where the firm provides services to the students without charging any cost.

The applicant sought an advance ruling before the Maharashtra Authority for Advance Ruling (AAR) for the following questions:

“1. Whether the service of providing students to foreign universities against commission from them comes under Export of services and no GST is chargeable and whether refund can be claimed on the accumulated input tax credit?

2. Fees charged from students is ancillary service, is it liable to GST?

3. In case, where no fees is charged from the students under promotional offer, how GST will be attracted in this transaction?”

As per the Maharashtra AAR, the services given by the applicant to the foreign universities for enabling student admission must be treated as an Export of Services under the IGST Act. Therefore, a refund can be claimed on the accumulated input tax credit, subject to verification and after following the legal process.

The authority clarified that GST applies to the services provided by the applicant to students for which a fee is collected. However, if the applicant is not charging any fees from the students under the promotional scheme, the free services will not be considered as supply, and the same will not attract GST.