2024 (8) TMI 399 - AT - Service Tax

Classification of service - intermediary service or not - whether the services rendered by the appellants to the overseas master i.e. M/s OCA constitutes an export of service during the impugned period i.e. 2009-10 to 2013-14? - Intermediary Service post 01.07.2012 or not - violation of principles of natural justice - extended period of limitation - penalties. HELD THAT - It is found that in any of the transactions, three parties are not involved; be it between the Australian universities and M/s OCA or be it M/s OCA and the Indian students. M/s OCA is rendering services to the Australian universities and the universities pay remuneration to M/s OCA; M/s OCA has appointed the appellant to help the Indian students who intend to study in Australian universities. In the scheme of arrangements, it is not brought on record if there is any agreement or arrangement between the foreign universities and the appellant or M/s OCA and Indian students. Therefore, it appears that the primary requirement of existence of three parties in the scheme of things is absent in the instant case. The main service is rendered by M/s OCA to the foreign universities and the appellant helps M/s OCA as far as the Indian students are concerned; neither the appellant nor M/s OCA charged any amount from the Indian students. Circular No.159/15/2021-GST dated 20.09.2021 issued by CBIC envisages that in respect of Intermediary Services, there should be a minimum of three parties and two distinct supplies i.e. main supply and ancillary supply; it also clarifies that a person involved in supply of main supply on principal-to-principal basis to another person cannot be considered as supplier of Intermediary Service. In the instant case, the appellants and M/s OCA are rendering the same service i.e. helping the students get admission in Australian universities and the appellants are rendering the same main service as M/s OCA; whereas M/s OCA get the remuneration from the universities on the fees paid by the students, the appellants get their remuneration. A doubt can arise as to whether the clarification issued by CBIC in the contacts of GST Act can be applicable to service tax. Extended period of limitation - penalties - HELD THAT - As the appeal succeeds on merits, other submissions are rendered superfluous as far as the facts of this case is concerned. Appeal allowed.

Issues Involved:

1. Whether the services rendered by the appellants to M/s OCA constitute an export of service during the period 2009-10 to 2013-14.
2. Whether the services rendered post 01.07.2012 constitute Intermediary Service.
3. Whether the services qualify as services relating to admission to recognized courses and thus do not attract service tax.
4. Whether the impugned order was issued in violation of principles of natural justice.
5. Whether the extended period of limitation and penalties can be invoked.

Detailed Analysis:

1. Export of Service (2009-10 to 2013-14):

The appellants argued that the services provided to M/s OCA, Australia, constitute export of service. The services included marketing and promoting Australian educational institutions to Indian students. The Department contended that the services were rendered and consumed in India, thus not qualifying as export. The Tribunal found that the services were provided to M/s OCA, and the benefit accrued outside India. Citing the decision in Arcelor Mittal Stainless (I) P. Ltd., the Tribunal held that the services rendered by the appellants satisfied the conditions of Rule 3(2)(a) of Export of Service Rules, 2005, for the period 01.04.2009 to 26.02.2010. For the period 27.02.2010 to 30.06.2012, the only conditions were that the service receiver should be located outside India and the consideration should be received in foreign exchange, both of which were satisfied.

2. Intermediary Service (Post 01.07.2012):

The Department classified the appellant's services as intermediary services. The Tribunal examined the definition of "Intermediary" under Rule 2(f) of Place of Provision of Service Rules, 2012, which requires three parties and two distinct supplies. The Tribunal found that the appellants were subcontractors to M/s OCA and not intermediaries between the Indian students and Australian universities. The appellants provided the main service directly to M/s OCA, who in turn provided the main service to the universities. The Tribunal relied on the case of IDP Education India Pvt. Ltd., where similar facts were present, and it was held that the appellant was not an intermediary.

3. Services Relating to Admission to Recognized Courses:

The appellants contended that their services related to admission to recognized courses and thus did not attract service tax. The Tribunal did not delve deeply into this issue as the appeal succeeded on other grounds.

4. Violation of Principles of Natural Justice:

The appellants argued that the impugned order was issued without considering their submissions and copied word-to-word from the Show Cause Notice. The Tribunal noted these submissions but did not make a specific ruling on this ground as the appeal was allowed on merits.

5. Extended Period of Limitation and Penalties:

The appellants argued that the issue was interpretational in nature, and there was no suppression or collusion to evade duty. Hence, the extended period and penalties were not applicable. The Tribunal did not specifically address this issue since the appeal was allowed on the substantive grounds.

Conclusion:

The Tribunal allowed the appeal, holding that the services rendered by the appellants to M/s OCA during the period 2009-10 to 2013-14 constituted export of service and did not fall under the category of "Intermediary Services" post 01.07.2012. The appeal was allowed with consequential relief, if any, as per law.

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