Intermediary service classification rejected for direct services to overseas clients; export of service treatment made tax demand unsustainable.

Services rendered on own account to foreign universities were held not to be intermediary services under the Place of Provision of Services Rules, 2012. The Tribunal applied settled precedent that earning commission does not by itself make a provider an intermediary where the activity is direct service to an overseas client rather than facilitation between two persons. The services were treated as export of service and, on that basis, the service tax demand, interest and penalty were unsustainable.

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Issues: Whether the services rendered to foreign universities for commission amounted to intermediary services taxable to service tax, or whether they constituted export of service and were therefore not liable to service tax.

Analysis: The dispute turned on the nature of the appellant's activity under the Place of Provision of Services Rules, 2012. The Tribunal noted that the issue was already settled in several prior decisions involving identical or similar activities, where services rendered to overseas educational institutions for commission were held not to fall within the definition of intermediary service under Rule 2(f). The appellant was found to be providing services on its own account to foreign clients, and the activity was treated as export of service rather than an arrangement or facilitation between two persons. In view of the settled position on merits, the Tribunal did not go into the other issues.

Conclusion: The services were not intermediary services and were classifiable as export of service; the service tax demand, interest, and penalty were unsustainable.

Ratio Decidendi: A person providing services on its own account to an overseas client does not become an intermediary merely because commission is earned for those services, and such services may constitute export of service rather than taxable intermediary service.

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