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TMI Blog2024 (12) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of service is taxable territory as the services are provided to Indian students. But the services as mentioned above have been rendered by the appellants for promotion and publicity of foreign universities among Indian students. The agreement for the same is between appellant and foreign universities. There is no agreement of appellant with Indian students. The amount in question is received from foreign universities in convertible foreign exchange and not from Indian students. The students are paying fees in case of getting admission, to the foreign university only. These observations are sufficient for us to hold that Indian students are not the service recipients of the impugned services rendered by the appellants. The place of provision is wrongly held to be in taxable territory (India). Hence foreign consultancy services provided by an assessee amounts to Export of services and they are outside the ambit of service tax and they are wrongly alleged as being rendered by intermediary. The fundamental principle enunciated by the Apex Court in ALL INDIA FEDERATION OF TAX PRACTITIONERS ORS VERSUS UNION OF INDIA ORS [ 2007 (8) TMI 1 - SUPREME COURT] is that service tax is a des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Service in terms of Rule 6A of Service Tax Rules. Hence Rule 9 of Place of Provision Rules has wrongly been invoked. Appellant is, therefore, not liable to pay service tax on foreign Consultancy fee. The show cause notice is otherwise held to be barred by time - the order under challenge is set aside and the appeal is hereby allowed. - DR. RACHNA GUPTA, MEMBER (JUDICIAL) AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Present for the Appellant: Shri B.L. Narasimhan Shri Kunal Agarwal, Advocates Present for the Respondent: Ms. Jayakumari, Authorized Representative ORDER The present appeal has been filed to assail the order in original No. 20/2017 dated 28.4.2017. The facts, in brief, culminating into the said adjudication order are that the intelligence was received in Zonal unit of Directorate General of Excise intelligence (DGCEI) indicating that the appellant who were earlier known as NN Chopra Consultants Pvt. Ltd. were not paying service tax on the commission received by them from the foreign universities/institutes, for arranging and facilitating provision of Student Recruitment Services to be provided in India to various foreign universities/institutes. During further inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsity which does not represent the activities of the appellant in totality. The appellant has entered into agreements with several foreign university, almost 244 in number, for promotion of those universities by disseminating information about their courses among students in India. For the purpose the appellants have agreed to engage themselves in the activities like advertisement, website promotion, road shows etc. however, without acting as the agent of those foreign universities. Few clauses of only one agreement with University of Technology, Sydney Australia dated 10.10.2012, have been considered by the department to presume that the appellant is acting as intermediatory for the foreign universities. The context of the agreement and the entire content therein has been absolutely ignored by the department. It is alleged that such a procedure adopted by the investigating team amounts to violation of principle of natural justice as procedural fairness is an inherent part of all departmental actions. Ld. Counsel has relied upon the decisions of Hon ble High Court Madras in the case of R. Sunder Vs. Deputy Collector of Customs reported as 1996 (082) ELT 451 Madras. The decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment of the services has been received by the appellant, the provider of the service, inconvertible foreign exchange. 8. Finally it is submitted that the extended period of limitation has wrongly been invoked while issuing the impugned Shaw Cause Notice. There is no evidence of alleged suppression of facts. The matter was within knowledge of department for almost two years decisions of Hon ble Supreme Court in the case of Continental Foundation joint venture Vs. CCE 2007 Tax Mann. Com 532 SC is relied upon. It is also the submission that the appellant has been reversing cenvat credit under Rule 6 (3) of cenvat credit Rule 2014, considering services to foreign university as non taxable services. With these submissions and praying for setting aside the imposition of penalty on the appellant, the order under challenge / order in original is prayed to be set aside and the appeal is prayed to be allowed. 9. While rebutting, the submissions made by the Ld. Counsels for the appellant, learned Department representative for the department has, at the outset, reiterated the findings in the impugned order. It is further submitted that apparently the students counselling is part and par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any as 244 universities). But show cause notice has discussed only one agreement with Australian university. It is further submitted that, the appellant has been discharging its service tax liability on the above incomes except on Foreign Consultancy Income on the grounds that it amounts to Export of Services as per Rule 6A of Service Tax Rules. 13. Learned counsel impressed upon the nature of service submitting that M/s MNCCPL suggest to the students the most suitable option for education in Foreign University/Institutes, based on the information provided by the students like marks, preferred destination/course/university etc. One the student is convinced, he is advised to approach their Branch Office along with all the documents required for admission 14. Various agreements with different foreign university are annexed on record. The scope of service appears to be mainly as follows: 15. The services to be provided by the Consultants-Advisor will include:- (i) Promotion of courses of study as well as associated services which are notified by the American University of Barbados time-to-time; (ii) To give wide publicity of courses and faculties for the medical courses notified by Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nique ID of the student. Thereafter on the basis of information fed, it analysis the best suitable option to match the student preference. On the basis of choices of Universities selected by the student, out of the matching reports, appellant further provide them the checklist Form and application forms of selected Universities along with other details like campus area, fees durations etc. Students are further advised to pay application fees directly to these universities. Further after certification of all relevant documents and checking of University admission form the concerned branch office of M/s NNCCPL places its stamp on the Agency detail column of University form and send the same (as per checklist) directly to the University via email or appellant s portal. After the University checked the applicability of the student and if they are eligible as per their requirement they send an unconditional/conditional offer to admission to the student through us having offers, fees structure etc. which it accepted. M/s NNCCPL advise student to apply for visa which is done by them paper base at VFS Centres. Once the Visa is cleared student goes to the respective foreign university for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set of words, the general word must be read in context of the preceeding or surrounding words to provide a gainful meaning to the definition. Thus phrase any other person has to be read as person like agent or broker. 20. Wharton's Law Lexicon, 16 Edition defines agent as follows: Agent, a person acting for another, whether by his express or implied authority, the general rule being, that whatever a person may do himself, that he may, as 'principal,' authorize another to do for him, and in accordance with the maxim, qui facit per alium facit per se, to fix him with the same liability in contract or tort as f he had done it himself. 21. Broker has been defined by the same referencer as under: Broker [fr. broceur, Fr., a person who breaks into small pieces), (1) an agent employed to make bargains and contracts between other persons in matters of trade, commerce and navigation, by explaining the intentions of both parties, and negotiating in such a manner as to put those who employ him in a condition to treat together personally: (2) and, more commonly, an agent employed by one party only to make a binding contract with another. As evident above, the common aspect in both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a clear denial of agent-principal relationship in the Agreement itself. The different agreements have specified it differently as: Brunel University London Agreement (1) Name of agreement to the Consultant shall have no power to enter into any contract on behalf of the University or issue any others whether in writing or orally to potential Applicants and/or any students of the university. (2) The Consultant warrants that it will make no representations to potential students as to the likelihood of success of their applications to the University or, if accepted, as to the likelihood of success in their courses of study undertaken at the university. The Consultant shall indemnify and keep indemnified the University from and against any loss damage or liability suffered and legal fees and costs incurred by the University as a result of the Consultant's breach of this clause. Insearch Partner Program Agreement (3) The Partner is not an agent of insearch and has no authority to any contract or other legal obligation, incur any liability on Insearch's behalf, or receive any money (including without limitation fees) on Insearch's behalf. For the avoidance of doubt, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange; and (f) the provider of service and recipient of service are not merely establishment of a distinct person in accordance with item (b) of Explanation 2 of clause (44) of section 65B of the Act. (2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification. 28. Therefore, if following conditions of Rule 6A will get satisfied, then the service will amount to Export of service and hence, it will be outside the ambit of service tax. A the provider of service is located in the taxable territory B. the recipient of service is located outside India. C. the service 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 accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) GSTL 32 (Del.) observed that the recipient of the service is determined by the contract between the parties and who has the contractual right to receive the ST/53328/2018 service and who is responsible for the payment for the service and the department has lost sight of this essential difference. The High Court of Delhi then considered the decision of the Larger Bench of the Tribunal in Paul Merchants Ltd. Vs. CCE, Chandigarh - 2012 (12) TMI 424-CESTAT-DEL.-LB which was rendered with reference to ESR, 2005 where the assessees were intermediary agents, providing money transfer services to foreign travellers, who were the end user on behalf of their principals and the contention of the department that this did not qualify as export of service was rejected referring to the CBEC clarification letter no. 334/1/2019- TRU dated 26.02.2010 that as long as the party abroad is deriving benefit from service in India, it is an export of service. The relevant paras of the decision in Verizon Communication India Private Limited (supra) is quoted as under:- 51. In the considered view of the Court, the judgment of the CESTAT in Paul Merchants Ltd. v. CCE, Chandigarh (supra) is right in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these services were provided from India and used outside India. 33. Though the department has invoked Rule 9 of Export of Service Rules according to which provider of service is to be considered. But we hold that services of M/s NNCCPL falls within the ambit of Rule 3 of Place of Provision Rules, 2012, according to which location of service recipient is relevant. Foreign universities the service recipient, are located outside the taxable territory. Therefore place of provision of impugned Foreign Consultancy Service is outside the taxable territory. Accordingly, we hold that show cause notice has wrongly invoked Rule 9 of Place of Provision Rules. Demand confirmed invoking said rule is therefore, liable to be set aside. The issue is otherwise no more res integra as being already dealt with by this Tribunal Principal bench in the case of CHF Industries (P) Ltd. Vs. Commissioner CGST, Noida 2021 (10) TMI 641-CESTAT Allahabad, Macquarie Global Services Ltd. Vs. CCE ST, Gurgaon-1 2021 (12) TMI 481 - CESTAT Chandigarh and RS Granite Machine Tools Pvt. Ltd. Vs. CGST and CE (Chennai-North) 2019 (1) TMI 1179 CESTAT Chennai. 34. Finally coming to plea of invocation of extended period, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the Service Tax department and has been filing its service tax returns regularly. Payment of Service Tax as applicable on them has clearly been discharged by them vis- -vis domestic consultancy Income and Coaching Services. The appellant is held not liable to pay service tax with reference to foreign Consultancy Income i.e. the income received from foreign universities for promoting and publicizing their business in India, as discussed above. We hold that there is no evasion of tax, question of having any intent to evade is redundant when the tax is already paid. Thus we hold that the show cause notice is barred by time. 35. In the light of entire above discussion, we held that appellants are wrongly held as intermedia in terms of Rule 2(f) of Place of Provision Rules, 2012. The services rendered amounts to Export of Service in terms of Rule 6A of Service Tax Rules. Hence Rule 9 of Place of Provision Rules has wrongly been invoked. Appellant is, therefore, not liable to pay service tax on foreign Consultancy fee. The show cause notice is otherwise held to be barred by time. Resultantly, the order under challenge is set aside and the appeal is hereby allowed. (Pronounced in open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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