2024 (12) TMI 80 - AT - Service Tax

Levy of service tax - Intermediary services - commission received from the foreign universities for referral services provided to this foreign universities - case of the department is that the referral services provided to the foreign universities are liable to service tax - HELD THAT - There is no dispute on the fact that the appellant have provided the service to the foreign universities and they have received the commission. Therefore, the service provided by the appellant falls under the category of export of service. Therefore, the same cannot be liable to service tax. This issue is no longer res-integra as on the identical facts this Tribunal has considered the issue in the case of Medway Educational Consultant Pvt. Ltd. 2024 (3) TMI 1178 - CESTAT NEW DELHI wherein the principal bench of the Tribunal held that ' A perusal of the definition of intermediary under the service tax regime vis-a-vis the GST regime would show that the definition has remained similar. Even as per circular dated 20-9-2021 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (GST Policy Wing), the scope of intermediary services has been dealt in Para 2 thereof. In Para 2.2 it stands clarified that the concept of intermediary was borrowed in GST from the Service Tax Regime. The circular after making a reference to the definition of intermediary both under Rule 2(f) of the Place of Provision of Service Rules, 2012 and under Section 2(13) of the IGST Act clearly states that there is broadly no change in the scope of intermediary services in the GST regime vis-a-vis the service tax regime except addition of supply of securities in the definition of intermediary in the GST law.' Thus, it is settled that the service in question being export of service cannot be liable to service tax. Moreover, the service being provided to an educational institute in respect of education has been exempted from the service tax as per the Notification No. 06/2014 dated 11.07.2014, therefore, the issue is no longer res-integra. The impugned order is set aside - Appeal is allowed.

Summary

Issues Involved:

1. Taxability of referral services provided to foreign universities as "export of service".
2. Classification of services as "intermediary services" under the Place of Provision of Service Rules, 2012.
3. Applicability of exemption under Notification No. 06/2014 for services related to education.

Issue-Wise Detailed Analysis:

1. Taxability of Referral Services as "Export of Service":

The primary issue revolves around whether the referral services provided by the appellant to foreign universities qualify as "export of service" and are thus exempt from service tax. The appellant argued that these services constitute an export of service, as they are provided to foreign universities, with the payment received in convertible foreign exchange. The Tribunal noted that the services fall under the category of export of service as per Rule 6A of the Service Tax Rules, 2012, which stipulates that services provided from India and used outside India, with payment received in foreign exchange, qualify as export. The Tribunal referenced previous judgments, including the case of Medway Educational Consultant Pvt. Ltd., which supported the appellant's position that such services are not liable to service tax. The Tribunal concluded that the appellant met all the criteria for export of service, and thus, the services were not taxable.

2. Classification as "Intermediary Services":

The department contended that the services should be classified as "intermediary services," which would subject them to service tax. The Tribunal analyzed the definition of "intermediary" under Rule 2(f) of the Place of Provision of Service Rules, 2012, which describes an intermediary as someone who arranges or facilitates a service between two or more parties but does not provide the main service on their own account. The Tribunal found that the appellant provided services on their own account directly to the foreign universities and was not acting as an intermediary. The Tribunal cited the case of Sunrise Immigration Consultants Pvt. Ltd., where similar services were not considered intermediary services. The Tribunal concluded that the appellant was not an intermediary, as the services were provided directly to the foreign universities, and thus, the classification as intermediary services was incorrect.

3. Applicability of Exemption Under Notification No. 06/2014:

The appellant also argued for an exemption under Notification No. 06/2014, which exempts services related to education from service tax. Although the Tribunal resolved the main issue in favor of the appellant, it acknowledged the appellant's alternate plea for exemption. The Tribunal noted that the services provided to educational institutions in respect of education are exempt from service tax as per the notification. However, since the primary issue was decided on the merits of the export of service, the Tribunal did not delve deeply into this exemption.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal on the grounds that the services provided by the appellant were indeed export of services and not intermediary services, thereby exempt from service tax. The judgment emphasized that the services rendered met all criteria for export of service, and the appellant was not liable for service tax under the provisions of the Act. The Tribunal's decision was pronounced in open court on November 25, 2024.