Education Consultant Services to Foreign Universities Qualify as Export, Not Intermediary Services: CESTAT [Read Order]

The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that services provided by education consultants to foreign universities qualify as export of services and are not liable to service tax as intermediary services.

Canam Consultants Ltd., the appellant, is engaged in promoting and marketing foreign universities and their courses among Indian students wishing to study abroad. The appellant had entered into agreements with foreign universities to conduct seminars, counsel students, forward profiles to universities, and assist with the admission process. For these services, the appellant received payments in foreign currency from the foreign universities.

The appellant’s counsel argued that the services were provided to foreign universities located outside India, payments were received in foreign currency, and there was no agreement or payment from Indian students, making it an export of services under the Service Tax Rules. They argued that under established legal principles, including decisions in Sannam S-4 Management Services and other similar cases, services provided to foreign universities on a principal-to-principal basis do not constitute intermediary services.

The revenue counsel argued that the appellant was arranging and facilitating the enrolment of students into foreign universities, which amounted to intermediary services under Rule 2(f) of the Place of Provision of Services Rules, 2012, making the appellant liable to pay service tax.

The department had issued a show cause notice demanding service tax of Rs. 14.86 crore for the period from July 2012 to June 2017, which was reduced to Rs. 13.05 crore on adjudication, along with interest and penalty.

The tribunal comprising Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) observed that the services provided by the appellant to foreign universities were on a principal-to-principal basis, the foreign universities located outside India were the recipients of the service, and the payment was received in foreign currency.

The services are qualified as export of services and could not be categorised as intermediary services under Rule 2(f) of the POPS Rules, following consistent past rulings. The tribunal set aside the demand for service tax, interest, and penalty, holding that the appellant’s services constituted export of services and were not liable for service tax. The appeal was allowed.

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