Mr. Mayank Jain (“the Applicant”) is an individual exploring business opportunity in providing marketing and advisory services in relation to the Employee Based Immigration: 5th Reference Program notified by the United States Citizenship and Immigration Services (“EB-5 Program”).
The EB-5 Program envisages that an investor is eligible to a permanent residence permit in the United State of America subject to an investment of US$ 500,000 and job-creation in a commercial entity or investment fund, commonly referred to as a “Regional Centre” or a “Company”, which is approved and recognized by the Government of the United States of America.
The Applicant wants to provide certain services in the nature of marketing and intelligence to the “Consultant Manager” acting for the Regional Centre or Company enabling them to receive investments from prospective investors. The scope of work under this Agreement titled as “Foreign Immigration Advisor Agreement” can broadly be stated as below:
- Marketing Services which includes collecting and analysing information, market the EB-5 Program in India to prospective investors, address queries of the Consultant Manager and marketing support services.
- Handholding services- Upon confirmation of a proposed investment from the Consultant Manager and prospective investor, provide hand-holding services thereto.
- Whether the Marketing services and Handholding services constitutes a supply of “Support services” classified under SAC 9985 or “Intermediary service” classifiable under SAC 9961 / 9962 or any other heading?
- Whether the Marketing services and Handholding services will constitute export of services as defined under Section 2(6) of the IGST Act, 2017 (“IGST Act”)?
The Hon’ble AAR, Maharashtra, observed the definition of ‘intermediary’ contained in Section 2(13) of the IGST Act, ‘place of supply of intermediary services’ contained in Section 13(8)(b) of the IGST Act and vide Order No. GST- GST-ARA- 103/2018-19/B-63 dated June 1, 2019, held as under:
- For the EB-5 programs there are various such Consultant Managers/ Attorney who specialize in this field in the USA and the applicant will be doing all the process in India on behalf of the Consultant Manager and effectively will be working on his behalf as an agent. The fact of the matter is that the Applicant is providing the intermediary service in the name of marketing service. The consideration for the services rendered by the Applicant will be paid upon successful investment/ repatriation by the investor. The Applicant does not provide any services on his own but is acting as an intermediary.
- The Applicant is authorised by the Company to act and represent them on their behalf and carry out such functions viz. marketing of the EB-5 program in India to prospective investors and to immigration and administrative related duties on behalf of the Company. Therefore, the Applicant by way of acting on behalf of the Company for performing the immigration and administrative related functions of the Company towards their prospective investors, is essentially acting as an agent/representative of the company in India, i.e. the intermediary. Therefore, handholding services provided by the Applicant to the Company may be appropriately classifiable as ‘intermediary services’.
- On the basis of Section 13 (8)(b) of the IGST Act, it is pretty clear the place of supply of the intermediary service would be the location of the supplier of services, e., the intermediary. In the instant case, the location of the Applicant (the intermediary) is the taxable territory of India. Therefore, marketing and handholding services does not constitute export of services.
Important legal provisions:
Section 2(13) of the IGST Act
“(13) “intermediary” means a broker, an agent or ant/ other person, whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons but does not include a person who supplies such goods or services or both or securities on his own account;”
Section 13(8)(b) of the IGST Act
“(8) The place of supply of the following services shall be the location of the supplier of services, namely:
(b) Intermediary services;”