Appellant's student recruitment services to overseas universities qualify as export of service, not intermediary service

CESTAT New Delhi held that appellant's services to overseas universities for student recruitment constituted export of service, not intermediary service. The appellant received consideration in convertible foreign exchange from foreign universities located outside India's taxable territory. Since appellant provided services on its own account to overseas recipients and received consideration from them, it could not be classified as intermediary service. The department's contention that appellant rendered dual services to both students and universities was rejected, as no consideration was charged from students and fees were directly remitted to universities. Appeal allowed, service tax liability set aside.

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Issues Involved:
1. Whether the service rendered by the appellant to overseas universities/colleges amounts to "export of service" or "intermediary service" as claimed by the Revenue.

Summary:

Issue 1: Export of Service

The appellant rendered services to overseas educational universities by enrolling prospective students for admissions, receiving commission in convertible foreign exchange. The recipient of service (foreign universities) are located outside India, and the benefit of service accrues outside India. The appellant argued that their services qualify as "export of service" as per Rule 6A of the Service Tax Rules, 1994, satisfying all criteria for export of service: service provider located in India, recipient located outside India, payment in convertible foreign exchange, and the benefit of service accruing outside India.

Prior to 1.07.2012, the services were treated as export of service under the Export of Service Rules, 2005 (ESR, 2005). Post 1.07.2012, Notification No. 28/2012 introduced the Place of Provision of Service Rules, 2012, and Rule 6A was introduced by Notification No. 36/2012 to define export of services. The Tribunal found that the appellant met all conditions under Rule 6A, thus qualifying their services as export of service, not liable to service tax.

The Tribunal cited several decisions, including All India Federation of Tax Practitioners Vs. Union of India, Verizon Communication India Private Limited Vs Assistant Commissioner, ST, Delhi, and Study Overseas Global (P) Ltd Vs. Commissioner of Service Tax, Delhi, supporting the principle that service tax is a destination-based consumption tax, and services provided outside the taxable territory are considered export of service.

Issue 2: Intermediary Service

The department contended that the appellant's services should be treated as "intermediary services" under Rule 2(f) of the Place of Provision of Service Rules, 2012. The Tribunal noted that an intermediary arranges or facilitates the main supply between two or more persons, which was not the case here. The appellant provided services on their own account to foreign universities, not acting as an intermediary.

Referring to Rule 6 of the Rules, 2012, the Tribunal agreed with the appellant's submission that they were providing services relating to specific events (recruitment of students), and the place of provision of service should be where the event is actually held. The Tribunal cited decisions like Sunrise Immigration Consultants Private Limited Vs Commissioner of Central Excise and Service Tax, Chandigarh, and Ernest and Young Vs. Additional Commissioner, CGST, Delhi, concluding that the appellant's services do not qualify as intermediary services.

The Tribunal also noted that there was no privity of contract between the appellant and the students, and the fees were directly remitted to the universities. The appellant did not charge any consideration from the students, aligning with the principle laid down in Verizon Communications India.

Given the findings, the Tribunal set aside the impugned order and allowed the appeal, concluding that the appellant's services qualify as export of service and are not subject to service tax.

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