Non-intermediary service principle treats foreign university referral and promotion work as export of service, not taxable intermediary activity

Referral and promotional services for foreign universities were treated as non-intermediary services because the appellant identified prospective students, promoted universities and forwarded admissions on instructions from the foreign recipient, with consideration paid by that foreign recipient rather than the students. On those facts, the activity did not amount to arranging or facilitating the main educational supply between two other persons in the manner required by the intermediary definition, and it was considered export of service. The analysis states that the negative list, admission-related exemption and place-of-provision framework did not change the result, so the service tax, interest and penalty demand was not sustainable.

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Issues: Whether referral and promotional services provided to foreign universities constituted intermediary services liable to service tax, and whether the demand could be sustained on the footing that the services were neither covered by the negative list nor by the exemption for admission-related services or export of service.

Analysis: The appellant's activity consisted of identifying prospective students, promoting foreign universities, maintaining data, and forwarding students for admission. The consideration was received from the foreign universities, not from the students. On the facts, the services did not amount to arranging or facilitating the main educational service between two others in the manner contemplated by the intermediary definition. The Tribunal followed its earlier decisions on identical facts, which held that such referral and marketing activity is not intermediary service and that the recipient being located outside India makes the service export of service. The reliance placed by the Revenue on the exemption and the place of provision framework did not alter the position on the facts found.

Conclusion: The demand of service tax, interest, and penalty was not sustainable. The services were held to be non-taxable in the hands of the appellant, and the appeal succeeded.

Final Conclusion: The impugned order was set aside and the appellant obtained consequential relief.

Ratio Decidendi: Referral and promotional services rendered for foreign universities, where consideration is paid by the foreign recipient and the service does not facilitate the main service as an intermediary, are not intermediary services and may qualify as export of service.

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