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. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the activities of locating and counselling prospective students for admission to foreign educational institutions, for which commission was received from overseas universities/colleges, constituted 'intermediary services' under the Place of Provision of Services Rules, 2012, thereby defeating the claim of export. (ii) Whether, on the facts found, the services provided to universities/colleges located outside India qualified as export of service under Rule 6A of the Service Tax Rules, 1994, resulting in no service tax liability. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Classification as 'intermediary services' Legal framework (as discussed by the Tribunal): The Tribunal examined the definition of 'intermediary' under Rule 2(f) of the Place of Provision of Services Rules, 2012, and the Revenue's reliance on Rule 9(c) of those Rules to treat the activity as intermediary service. Interpretation and reasoning: The Tribunal found, on admitted facts, that the respondent undertook activities of identifying potential students willing to study abroad and guiding them regarding options and opportunities, and that the respondent's commission was paid by overseas universities/colleges (the respondent's clients). The Tribunal treated the 'main service' as education, which commenced after completion of the respondent's activities. Crucially, the Tribunal held that for an activity to fall within 'intermediary services' in this context, the arrangement must reflect a tripartite structure; the Tribunal expressly noted that there was no such tripartite agreement among the parties. The respondent was found to be providing services directly to overseas universities/colleges located outside India, not acting as an intermediary between students and the foreign institutions within the meaning applied by the Tribunal. Conclusion: The Tribunal concluded that the respondent's services did not fall within the ambit of 'intermediary services' under the Place of Provision of Services Rules, 2012, and therefore the Revenue's intermediary classification could not be sustained. Issue (ii): Whether the services were 'export of service' and hence not taxable Legal framework (as discussed by the Tribunal): The Tribunal considered the export-of-service position by reference to Rule 6A of the Service Tax Rules, 1994, in conjunction with the place-of-provision analysis under the Place of Provision of Services Rules, 2012, as applied in the precedent relied upon by the Tribunal. Interpretation and reasoning: The Tribunal held that the respondent provided services relating to a specific event, namely admission to educational institutions/universities, to recipients located outside India (universities/colleges abroad) and received commission from them. Having rejected 'intermediary' classification (including on the ground of absence of a tripartite agreement), the Tribunal relied on the reasoning adopted in a prior Tribunal decision involving similar facts, and applied it to conclude that the respondent's services to overseas educational institutions qualified as export. On that basis, the Tribunal held that the respondent was not liable to pay service tax on the impugned demands. Conclusion: The Tribunal upheld the impugned orders, held that no service tax was payable on the services in question as they were treated as export, and dismissed the Revenue's appeals.