2018 (11) TMI 1085 - AT - Service Tax

Classification of services - educational consultancy services for prospective students who aspire to study abroad and assist them in the form of logistical support in getting admission into foreign universities - whether classified under Intermediary Agent or not - place of provision of services - material period involved in the instant appeal is 2014-15 and 2015-16 (up to September 2015) i.e. post negative list regime. Held that - Appellant herein provides referral services to various foreign universities for which they receive an amount as commission/ referral fees. The activity of the appellant is to locate the candidates who wants to study abroad, make a data base and refer the student s name to foreign universities; propagate to the future candidates the advantages of specific universities and studying in them. For rendering these services the appellant gets paid by the foreign universities as per the contractual agreement. The appellant is not collecting any amount from the candidates referred to foreign universities. The issue is no more resintegra - The Tribunal in the case of Sunrise Immigration Consultants Pvt Ltd 2018 (5) TMI 1417 - CESTAT CHANDIGARH , identical issue arose as to whether referring the students and the amounts received as referral commission would get covered for tax purposes under Rule 2(f) of point of provision of Service Rules 2012 and whether such services would fall under the category of intermediary services or otherwise. The Bench after considering the submissions made recorded the following order which covers the issue in favour of the appellant which are applicable in this case also - it was held in the case that As the appellant did not arrange or facilitate main service i.e. education or loan rendered by colleges/banks. In that circumstances, the appellant cannot be called as intermediary. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Whether the activity of promoting foreign universities amounts to intermediary services.
2. Tax liability on the services rendered.
3. Applicability of the exemption under Notification No. 25/2012-ST.
4. Whether the services provided qualify as export of services.
5. Invoking the extended period of limitation.

Issue-wise Detailed Analysis:

1. Whether the activity of promoting foreign universities amounts to intermediary services:
The primary issue was whether the appellant's activities of promoting foreign universities and assisting students in getting admissions constitute intermediary services. The appellant argued that they were not intermediaries as they did not facilitate the main service (education) provided by the universities but merely promoted the universities. They cited precedents from the Tribunal in the cases of Sunrise Immigration Consultants Pvt Ltd and Study Overseas Global Pvt Ltd, which held that similar services did not qualify as intermediary services. The Tribunal agreed, stating that the appellant acted on a principal-to-principal basis and did not facilitate the main service.

2. Tax liability on the services rendered:
The lower authority had confirmed the tax demand on the appellant, considering their services as intermediary services under the Place of Provision of Services Rules, 2012. However, the Tribunal found that the services provided by the appellant were not intermediary services and thus not taxable under the Finance Act, 1994. The Tribunal referenced the decisions in Sunrise Immigration Consultants Pvt Ltd and Study Overseas Global Pvt Ltd, which supported the appellant's case.

3. Applicability of the exemption under Notification No. 25/2012-ST:
The appellant argued that their services were related to the admission of students and should be exempt under Sl. No. 9 of Notification No. 25/2012-ST. The lower authority had rejected this claim, stating that the exemption was only for services provided within India. The Tribunal did not delve deeply into this issue as it had already decided that the services were not taxable.

4. Whether the services provided qualify as export of services:
The appellant claimed that their services qualified as export of services since the recipient (foreign universities) was located outside India, and the payment was received in foreign currency. The Tribunal agreed, referencing Rule 3 of the Export of Services Rules, 2005, and the Delhi High Court's decision in the case of Indian Association of Tour Operators vs UOI, which supported the appellant's position. The Tribunal concluded that the services were indeed export of services and not liable to service tax.

5. Invoking the extended period of limitation:
The lower authority had invoked the extended period of limitation for the tax demand. However, the Tribunal found that the issue involved interpretation of the Place of Provision of Services Rules, 2012, and thus the extended period was not applicable. The Tribunal referenced the decision in Sunrise Immigration Consultants Pvt Ltd, which held that the extended period was not invocable in such cases.

Conclusion:
The Tribunal set aside the impugned order, holding that the appellant's services did not qualify as intermediary services and were not taxable under the Finance Act, 1994. The services were deemed to be export of services, and the extended period of limitation was not applicable. The appeal was allowed with consequential relief.

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