TaxTMI 
TaxTMI 
2024 (12) TMI 80
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....med. The adjudication order dated 30.12.2016 was challenged by way of appeal before the Commissioner (Appeals) who vide impugned order dated 10.02.2017 upheld the demand and rejected the appeal. However, the penalty imposed under Section 78 was reduced to 50% of the service tax payable. Being aggrieved by the order-in-appeal appellant filed the appeal. 2. Shri Mahesh Raichandani, Learned Counsel appearing on behalf of the appellant at the outset submits that the appellant has provided the referral services to the foreign universities which is export of service. Hence the same is not taxable. He submits that identical issue has been considered in the various identically placed agencies wherein this Tribunal has held that the service being export of service not liable to service tax. He placed reliance on the following judgments:- * Service Tax Appeal No. 53328 of 2018 (Tri. - Del.) M/s. Medway Educational Consultant Pvt. Ltd. vs. Commissioner CGST Commissionerate, Delhi West - CESTAT Delhi * Service Tax Appeal No. 85867 of 2016 (Tri. - Mum.) M/s. Krishna Consultancy vs. Commissioner of CGST, Nagpur - CESTAT Mumbai * Service Tax Appeal No. 52205 of 2015 (Tri. - Chandigarh) M/s....
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....nt were treated as export of service and the appellant was not required to make the payment of service tax. 9. Coming to the two competing services, we need to consider Notification No. 28/2012 dated 20.06.2012 issued in exercise of power under Section 66C(1) read with Section 94(2)(hhh) of the Act introducing the Place of Provision of Service Rules, 2012 effective from 1.07.2012. Rule 3 to 12 of Rules, 2012 provide different category of place of provision. The provisions of Rules, 2012 as are relevant for the present controversy are set out below: "2(f) "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) between two or more persons, but does not include a person who provides the main service on his account. "Rule 2(f) amended vide Notification No. 14/2014-ST dated 11.07.2014 w.e.f. 01.10.2014 reads as under: 2(f) "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but d....
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....ce is not a service specified in Section 66D of the Act, (d) The place of provision of the service is outside India, (e) The payment for such service has been received by the provider of service in convertible foreign exchange, and (f) The provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 2 of Clause (44) of Section 65B of the Act." 10. In the present case we are concerned with the period post July 2012 and in view of the provisions of ESR, 2005 and the subsequent Notifications of 2012 what emerges is that the intent of the legislature was that taxes and duties cannot be exported. We need to examine the role played by the appellant for providing the services to their clients. The undisputed fact is that the appellant had entered into agreement with various foreign universities whereby the appellant was required to provide services to the universities which implies that the service provider is located in India and the recipients of service were located outside India. It is also an undisputed fact that the appellant was receiving the consideration for the service rendered by way of conve....
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....e forms and submitting them to the respective universities. That all these activities performed by the appellant are part of its contract with the foreign universities located outside India. The various clauses of the agreement clearly points out that the service provider, the appellant and the recipient of service, the foreign university was working on principal to principal basis. Considering the conditions specified under section 6A for categorizing a service to be export of service, we find that the appellant fully satisfies the said conditions and therefore the service rendered by the appellant being "export of service" are not liable to be taxed under the provisions of the Act. 12. The view taken by us gain support from the earlier decisions, which we would like to take note of. The fundamental principle enunciated by the Apex Court in All India Federation of Tax Practitioners Vs. Union of India - 2007 (7) STR 625 (SC) is that service tax is a destination based consumption tax, leviable only on services provided within the country. The provision of Section 66B of the Act, explicitly provides that for service tax to be levied in terms of Chapter V of the Act, the service ha....
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....person or persons affected by the performance of the service. Thus, when the person on whose instructions the services in question had been provided by the agents/sub-agents in India, who is liable to make payment for these services and who used the service for his business, is located abroad, the destination of the services in question has to be treated abroad. The destination has to be decided on the basis of the place of consumption, not the place of performance of Service." 52. In Vodafone Essar Cellular Ltd. v. CCE (supra), the CESTAT explained the arrangement lucidly in the following words : "Your customer's customer is not your customer. When a service is rendered to a third party at the behest of your customer, the service recipient is your customer and not the third party. For example, when a florist delivers a bouquet on your request to your friend for which you make the payment, as far as the florist is concerned you are the customer and not your friend." 14. On similar issue where commission was received from foreign universities for promotion and marketing of universities, the Tribunal in Study Overseas Global (P) Ltd Vs. Commissioner of Service Tax, Delhi, 20....
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....e Apex Court, where leave has been granted but there is no stay of the impugned order. 16. Needless to mention, as per the agreement between the appellant and the foreign university the services were delivered outside India as the recipient of service is the foreign universities who are located outside India and the benefit of service rendered by the appellant also accrued outside India, coupled with the fact that the appellant received the payment against the services in convertible foreign exchange and the appellant and the recipient of service are independent legal identities and are not merely establishment of distinct person. It is thus evident that the appellant met the criteria under Rule 6A(1) of the ST Rules and therefore being "export of service" was not amenable to service tax. "Intermediary Service." 17. We may now consider the stand of the department that the services rendered by the appellant has to be treated as "intermediary services" defined under Rule 2(f) of the Rules, 2012. From the definition of "intermediary services", we find that activity between two parties cannot be considered as an intermediate service as intermediary essentially arranges or faci....
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....nt cannot be called as intermediary in the light of the judgment issued by the Advanced Ruling Authority in the case of Universal Services India Pvt. Ltd. reported in 2016 (42) STR 585 (AAR) and Godaddy India Web Services Pvt. Ltd. reported in 2016 (46) STR 806 (AAR) wherein it has been observed as under: "10. The definition of "intermediary" as envisaged under Rule 2(f) of POS does not include a person who provides the main service on his own account. In the present case, applicant is providing main service, i.e. "business Support Service" to WWD US and on his account. Therefore, applicant is not an "intermediary" and the service provided by him is not intermediary service. Further, during arguments, applicant drew our attention to one of the illustration given under paragraph 5.9.6 of the Education Guide, 2012 issued by C.B.E. & C. Relevant extract is as under: Similarly, persons such as call canters, who provide services to their clients by dealing with the customers of the client on the client's behalf, but actually provided these services on their own account', will not be categorized as intermediaries. Applicant relying on above paragraph submitted that call centres, by de....
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....service and expressly excludes any person who provides such main service "on his own account". 30. A bare perusal of the recitals and relevant clauses of the MSA reproduced hereinabove do not in any manner indicate that petitioner is acting as an "intermediary" so as to fall within the scope and ambit of the definition of "intermediary" under Section 2(13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. The said clauses are in relation to the modalities of how the actual work would be carried out and do not in any manner establish that the petitioner was required to arrange/facilitate a 3rd party to render the main service which has actually been rendered by the petitioner. 36. In the pre-GST regime the term "intermediary services" was defined under Rule 2(f) of the Place of Provision of Service Rules, 2012. Under the 2012 Rules "intermediary services" were defined to mean a broker/an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person ....
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....ndisputably, the Services provided by the petitioner would fall within the scope of the definition of the term 'export of service' under Section 2(6) of the IGST Act." 22. The stand of the department that the appellant was rendering two types of services, one by way of rendering consultancy services to the students who wanted to study abroad by assisting them and the second was service to foreign universities by way of recruitment of students for them, is not correct. Firstly, the fees deposited by the students is directly remitted to the universities. Secondly, the appellant is not charging any consideration from the students and there cannot be any taxable service without any consideration. Section 66B, the charging section, in effect provides that service tax shall be levied on the value of the services, other than those specified in the negative list. In other words there is no privacy of contract between the appellant and the prospective students as laid down by the Delhi High Court in Verizon Communications India, (supra): "In the present case there is no privacy of contract between Verizon India and the customers of Verizon US. Such customers may be the 'users' of the ....