Consultancy Services to a Foreign University/Foreign Group Entity does not fall under “Intermediary Services”: CESTAT [Read Order]

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that consultancy services to the foreign university/foreign group entity do not fall under the category of “intermediary services” and the appellants-service provider are eligible for the benefit of “export of services‟.

Sannam S-4 Management Services India Pvt. Ltd, the appellant/assessee is in the business of providing range of consultancy services including exploring development opportunities in Indian market to international educational organizations. For carrying out this activity, the appellant has entered into an agreement with various universities all over the world, whereby the appellant agrees to enlighten the prospective students in India with the opportunities abroad.

Get Complete Coverage on Budget 2025-26 Click here

In some cases, the appellant enters into agreement with its own group entities located outside India, who have existing arrangement or agreements with foreign universities and these foreign group entities have subcontracted its entire exercise to the appellant.

VAT ITC Disallowance: Calcutta HC directs WB Commercial Tax Board for Verification of Documents including Original Tax Invoice and Fresh Consideration of Issues [Read Order]

Depending on the appellant's expenses, the overseas universities or the group entities pay consultation fees to the appellant in convertible foreign currency. In order to avoid paying service tax, the appellant classified its operations as service exports on its ST-3 Returns. More than two parties were involved in the agreement between the appellant and the group entities since the appellant in India hired designated advisers to represent and report to the universities overseas.

GST READY RECKONER: Complete Topic wise Circulars, Instructions & Guidelines Click here

The department figured that the appellant had been acting as a "intermediary" in accordance with POPS Rule 2(f) by organizing and supporting students' enrollment in overseas colleges. Accordingly, the appellant is offering services related to enabling educational services between Indian students and foreign universities within the terms of the agreement. After adjudication, the demand was upheld, concluding that the appellant is acting as a "intermediary" under Rule 2(f) of the POPS Rules and that, because of its Indian location, the service is being provided in a taxable area, which will result in taxable income for the appellant. The appeals have been submitted to the Tribunal by the appellant.

No Service Tax or GST on Legal Services by Individual Lawyers: Orissa HC[Read Order]

The two-member bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that at least three parties and two separate supplies—the primary supply and the auxiliary supply—should be involved in the provision of intermediate services. The fact that an individual who supplies the primary supply to another individual on a principal-to-principal basis cannot be regarded as a provider of an intermediary service was also made clear.

Complete Ready to Use PDFs of 200+ Agreements Click here

The tribunal ruled that while the appellant does not offer instruction or admit students, the institutions handle applications and carry out the primary function of delivering education. All that is needed of the appellant is to promote international universities in India. Every action taken by the appellant is covered by the agreement with the international universities outside of India.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates