2026 (1) TMI 519 - AT - Service Tax

Student recruitment counselling for foreign universities paid by commission treated as export service, not 'intermediary'; tax demand dismissed.

The dominant issue was whether the assessee's activities of identifying and counselling prospective students for foreign institutions, for which overseas ... Levy of differential tax - whether the respondent has deliberately not shown actual income for providing taxable service in ST-3 Returns with mala-fide intention to evade payment 24% service tax? - HELD THAT:- The issue is squarely covered by the decision of this Tribunal in the case of Oceanic Consultants Pvt. Ltd. Vs. Commissioner of Central Excise and Service Tax, Chandigarh-I [2024 (8) TMI 399 - CESTAT CHANDIGARH], wherein this Tribunal has observed that 'the services rendered by the appellants to M/s OCA during the period 01.07.2012 to 31.03.2015 do not fall under the category of 'Intermediary Services and thus, the appellants are eligible for the benefit of export of services.' Admittedly, in this case also respondent undertook activities of finding the potential students willing to study abroad and guide them in respect of various options and opportunities available to them for studying abroad. Further, the respondent provided services to their client ie. universities / colleges who paid commission to them. The main service is the education that starts after completion of services rendered by the respondents - The respondents also provided services relating to specific event i.e. of admission in educational institution/universities to recipient located outside India. For coming within the ambit of intermediary services, there should be a tripartite agreement. There is no such agreement among the parties. The respondent has providing services to their clients, i.e. Universities and Colleges located outside India. The respondents are not liable to pay the service tax - there are no infirmity in the impugned order - appeal of Revenue dismissed. Issues: (i) Whether the services rendered by the respondent for procuring admissions/assisting students with foreign educational institutions qualify as 'intermediary services' or as 'export of services' for the relevant periods, and consequently whether the service tax demands, interest and penalties founded on classification as intermediary services are sustainable.Analysis: The applicable legal framework includes the definition of 'intermediary' under Rule 2(f) of the Place of Provision of Services Rules, 2012, the sequential application of the Place of Provision Rules (Rules 3–12), Rule 6A and other provisions of the Service Tax Rules, 1994, and the requirement that intermediary services ordinarily involve three parties and a principal-agency or facilitation relationship rather than performance of the main service by the intermediary. The Tribunal applied prior decisions addressing comparable factual matrices (including Oceanic Consultants Pvt. Ltd. and IDP Education India Pvt. Ltd.) and the clarifications in CBIC Circular No.159/15/2021-GST concerning the distinguishing features of intermediary services. The decisive factual and legal indicators were: absence of a tripartite contractual arrangement linking foreign universities, respondent and students; the respondent rendering the same main service activity (assisting students) as the foreign principal rather than merely arranging between two other parties; remuneration flowing from foreign principals (universities) rather than from students in India; and the consumption/benefit of the service being located outside India with consideration in convertible foreign exchange. On these bases the Tribunal concluded that the respondents performed the main service (or acted as subcontractor/sub-agent to the foreign principal) and did not satisfy the conditions of an intermediary as envisaged by the Place of Provision Rules and relevant authorities.Conclusion: The services rendered by the respondent do not fall within the category of 'intermediary services' and instead qualify as export of services under the applicable place-of-provision framework; the service tax demands, interest and penalties based on classification as intermediary services are not sustainable.