The Central Excise, Customs and Service Tax Appellate Tribunal (CESTAT), New Delhi bench hasheld that IDP Education India not required to pay Service Tax for recruiting Students to Australian Universities as the department failed to establish that such services were acting as an intermediary between M/s IDP Australia and the foreign universities.
M/s IDP, Australia entered into an agreement with the foreign universities as per which, they pay a percentage of the tuition fee which they receive from the students to IDP Australia for its services. IDP Australia, in turn, has entered into “Student Recruitment Services Agreement” with the appellant-Company to help recruit students from India. The department held that the appellant shall pay service tax on the commission received from IDP Australia since they are providing the service of arranging and facilitating recruitment of student in India, as an intermediary between Foreign Education Service Providers, M/s IDP Australia and the students.
The Tribunal bench comprising Judicial member Mr. Anil Chaudhary and Technical Member P V Subba Rao observed that the appellant recruits or facilitates students in India, but does not get any remuneration from Australian universities.
“For the students who are recruited or admitted by the university in Foreign Country, recommended by appellant in India, IDP Australia gets paid by the Australian/Foreign universities. A share of that commission is given to the appellant by IDP Australia. This scheme of arrangementclearly shows that the IDP Australia is providing services to the foreign universities and is receiving consideration for the same. Insofar as recruitment of students in India is concerned, IDP Australia has created the appellant as a fully owned subsidiary, and has sub- contracted this work to the appellant,” the Tribunal said.
Delivering a ruling in favour of the appellant, the Tribunal held that “nothing has been brought on record in the show cause notice or in the order to show that the appellant has a direct contract with the foreign universities. There is nothing on record to show that the appellant is liasioning or acting as intermediary between the foreign universities and IDP Australia. All that is evident from the records is that the appellant is providing the services which have been subcontracted to it by M/s IDP Australia. As a sub contractor, it is receiving commission from the main contractor for its services. The main contractor – IDP Australia, in turn, is receiving commission from the foreign universities who pay a percentage of the tuition fee to IDP Australia. From the records, we find that Revenue has not established that the appellant is acting as an intermediary between M/s IDP Australia and the foreign universities, as alleged or held in the impugned order and the show cause notice.”
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