2018 (11) TMI 1085 - AT - Service Tax

Appellant's Foreign University Promotion Not Taxable

The Tribunal held that the appellant's activities promoting foreign universities did not amount to intermediary services, were not taxable under the ... Intermediary service - Place of Provision of Services Rules, 2012 - Export of services - Business Auxiliary Service - exemption under Notification No. 25/2012 - services related to admissionIntermediary service - Place of Provision of Services Rules, 2012 - Export of services - Business Auxiliary Service - Whether the appellant's referral and promotion services for foreign universities amount to intermediary services taxable under the Finance Act, 1994, or qualify as export of services and are not liable to service tax for the material period - HELD THAT: - The Tribunal found the material facts to be undisputed: the appellant located and referred prospective students to foreign universities, promoted those universities in India, received commission from the foreign universities in terms of contractual arrangements, and did not charge the students. Applying the definition of 'intermediary' in the Place of Provision of Services Rules, 2012, and having regard to the factual matrix and contracts, the Tribunal followed its earlier decisions in Sunrise Immigration Consultants Pvt Ltd and Study Overseas Global Pvt Ltd. Those decisions held that where the service provider merely promotes or markets the foreign principal's services in India and does not arrange or facilitate the 'main' service (education) on its account, the activity is not an intermediary service but falls within business-auxiliary promotion and, being provided to recipients located outside India and paid in foreign currency, qualifies as export of services. The Tribunal also noted the legal position that Rule 6A had been declared ultra vires by the High Court in Association of Tour Operators, which affected the reach of certain provisions relied upon by the Department. On the basis of these authorities and the facts of the case, the Tribunal concluded that the demand confirmed by the lower authorities for the periods in question was unsustainable. [Paras 7, 8, 10, 12, 14]Impugned demand set aside; appeal allowed as services are not intermediary taxable services but qualify as export of services for the material periodFinal Conclusion: The Tribunal allowed the appeal, set aside the impugned order-in-original and order-in-appeal, holding that the appellant's referral and promotion services for foreign universities do not amount to intermediary services liable to service tax for 2014-15 and 2015-16 (up to September 2015) and qualify as export of services, with consequential relief if any. Issues Involved:1. Whether the activity of promoting foreign universities amounts to intermediary services.2. Tax liability on the services rendered.3. Applicability of the exemption under Notification No. 25/2012-ST.4. Whether the services provided qualify as export of services.5. Invoking the extended period of limitation.Issue-wise Detailed Analysis:1. Whether the activity of promoting foreign universities amounts to intermediary services:The primary issue was whether the appellant's activities of promoting foreign universities and assisting students in getting admissions constitute intermediary services. The appellant argued that they were not intermediaries as they did not facilitate the main service (education) provided by the universities but merely promoted the universities. They cited precedents from the Tribunal in the cases of Sunrise Immigration Consultants Pvt Ltd and Study Overseas Global Pvt Ltd, which held that similar services did not qualify as intermediary services. The Tribunal agreed, stating that the appellant acted on a principal-to-principal basis and did not facilitate the main service.2. Tax liability on the services rendered:The lower authority had confirmed the tax demand on the appellant, considering their services as intermediary services under the Place of Provision of Services Rules, 2012. However, the Tribunal found that the services provided by the appellant were not intermediary services and thus not taxable under the Finance Act, 1994. The Tribunal referenced the decisions in Sunrise Immigration Consultants Pvt Ltd and Study Overseas Global Pvt Ltd, which supported the appellant's case.3. Applicability of the exemption under Notification No. 25/2012-ST:The appellant argued that their services were related to the admission of students and should be exempt under Sl. No. 9 of Notification No. 25/2012-ST. The lower authority had rejected this claim, stating that the exemption was only for services provided within India. The Tribunal did not delve deeply into this issue as it had already decided that the services were not taxable.4. Whether the services provided qualify as export of services:The appellant claimed that their services qualified as export of services since the recipient (foreign universities) was located outside India, and the payment was received in foreign currency. The Tribunal agreed, referencing Rule 3 of the Export of Services Rules, 2005, and the Delhi High Court's decision in the case of Indian Association of Tour Operators vs UOI, which supported the appellant's position. The Tribunal concluded that the services were indeed export of services and not liable to service tax.5. Invoking the extended period of limitation:The lower authority had invoked the extended period of limitation for the tax demand. However, the Tribunal found that the issue involved interpretation of the Place of Provision of Services Rules, 2012, and thus the extended period was not applicable. The Tribunal referenced the decision in Sunrise Immigration Consultants Pvt Ltd, which held that the extended period was not invocable in such cases.Conclusion:The Tribunal set aside the impugned order, holding that the appellant's services did not qualify as intermediary services and were not taxable under the Finance Act, 1994. The services were deemed to be export of services, and the extended period of limitation was not applicable. The appeal was allowed with consequential relief.