TMI Blog2024 (3) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... as intermediary essentially arranges or facilitates the main supply between two or more persons, which is not the case here. Further, the definition of intermediary service excludes any person who has provided the service on their own account. Here from the facts, it is evident that the appellant has provided the service on his own account to the recipient of service, i.e. the foreign university placed beyond the taxable territory of India. The Chandigarh Bench in M/S SUNRISE IMMIGRATION CONSULTANTS PRIVATE LIMITED VERSUS CCE ST, CHANDIGARH [ 2018 (5) TMI 1417 - CESTAT CHANDIGARH] considered the issue whether the assessee is an intermediary with reference to the service to universities, colleges and banks and whether any service tax could be levied and answered the issue in favour of the assessee. Following the observations in MS EVALUESERVE SEZ PVT LTD, EVALUESERVE COM PVT LTD VERSUS C.C.E S.T GURGAON I (VICE-VERSA) [ 2018 (12) TMI 1242 - CESTAT CHANDIGARH] , that receipt of consideration from the overseas client excluded them from tax as intermediary, the appellant cannot be held to be providing intermediary service as it is an admitted position that the appellant had been recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed by the Revenue? 3. The appellant is engaged in rendering services to overseas educational universities by enrolling prospective students for overseas admissions for which they had executed agreements with different foreign universities, located in Australia and New Zealand, for getting the students from India. The appellant received commission for their services from these foreign universities in convertible foreign exchange. The recipient of service (foreign universities) are located outside India and the benefit of service also accrues outside India. The appellant was authorised by the foreign universities for recruitment of students in various courses. The appellant assisted the students to get admission in these foreign universities and also advised them regarding the payment of tuition fees and associated fees required for study and also provided information as to the options available for their accommodation in these countries and about their departure from their home, country and arrival in the country of destination etc. 4. Show cause notice dated 25.09.2017 was issued to the appellant for the period 1.07.2012 to March 2016 treating the services rendered by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other associated costs and ensuring payment of the requisite fees to the Universities if the propsective students decide upon pursuing any course so promoted by them. 7. Having heard the parties at length we need to consider the applicability of the provisions of export of service and intermediary service. Export of Service 8. The appellant in support of his submission that prior to 1.07.2012 the services rendered by them were treated as export of service referred to the provisions of Export of Service Rules, 2005 (ESR, 2005) issued by the Central Government in exercise of powers under Section 93 and 94(2)(f) of the Act. Rule 3(2) of ESR, 2005 provided that the provisions of any taxable service specified in sub rule (1) shall be treated as export of service when the conditions are satisfied that such service is provided outside India and the payment for such service is received by the service provider in convertible foreign exchange. Rule 4 provided that any service which is taxable under clause 105 of Section 65 of the Act may be exported without payment of service tax. The issues regarding taxability of services provided from India and used outside India were clarified by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of specified services - The place of provision of following services shall be the location of the service provider:- (a) Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders; (b) ****; omitted vide Notification 46/2016-Service Tax (c) Intermediary services; (d) Service consisting of hiring of means of transport other than, - (i) aircrafts, and (ii) vessels except yachts up to a period of one months. Rule 3 of PPSR 2012, provides the place of provision of a service as the location of the recipient of service. Rule 6 provides the place of provision of service relating to events as the place where the event is actually held. In terms of rule 9 the place of provision of specified service shall be the location of the service provider and under sub rule (c) refer to intermediary service . The said rules do not describe export of service. The provision for export of service was separately provided by Notification No. 36/2012 dated 20.06.2012 whereby Rule 6A was introduced by the Service Tax (Second Amendment) Rules, 2012 by replacing ESR, 2005. Rule 6A reads as under: Rule 6A Export of Services (1) The provision of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, as it may require, in connection with the services; d. .. e. Assist with the screening and selection of appropriate students who meet the entry criteria of the Principal. f. Inform students of the enrolment, refund and withdrawal policy of the Principal. g. .. h. .. i. j. Invoice the Principal for each student the Consultant is claiming commission for k. Provide follow-up support service and liaison with student s families as requested by the Principal. l. Assist students in applying for relevant student visas and ensure all necessary information is provided to the New Zealand Immigration Service. m. Ensure that students arrive in New Zealand prior to their course start date. 11. The agreements with other universities are broadly similar in material aspects for providing service of recruitment of prospective students interested in enrolling in various programmes/courses conducted by the foreign universities. In furtherance of providing the service as enumerated above, the appellant makes the prospective students aware about the course fee and other associated cost and ensures payment of the requisite fees to the universities. If the prospective students decide upon taking admis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence 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 that The service recipient is the person on whose instructions/orders the service is provided who is obliged to make the payment from the same and whose need is satisfied by the provision of the service. The Court further affirms the following passage in the said judgment in Paul Merchants Ltd. v. CCE, Chandigarh (supra) which correctly explains the legal position : It is the person who requested for the service is liable to make payment for the same and whose need is satisfied by the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd invalid, in so far as it seeks to describe export of tour operator services to include non-taxable services provided by tour operators, it has been held that services rendered outside taxable territory of India are not amenable to service tax by virtue of Section 66B read with Section 65(51), 65(52) and 64(1) and 64(3) of the Finance Act, 1994, the relevant para is quoted below: 48 As already noticed since by virtue of Section 64(3) the whole of Chapter V applies only to taxable services, and Section 66C of the FA falls in that very Chapter, the rules made by the Central Government under Section 66C has to necessarily be only in relation to taxable service viz. services provided in the taxable territory of India. The legal fiction of treating service rendered outside India to be a service rendered in India cannot be introduced by way of rules. That too would partake the character of an essential legislative function, which cannot be delegated to the Central Government. In fact, such service cannot be brought to tax without amending Section 64(3) of the FA. The above principle relating to tour operators would equally apply to the instant case. Though the revenue has challenged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service to universities, colleges and banks and whether any service tax could be levied and answered the issue in favour of the assessee as under: 10. We find that the appellant is nowhere providing services between two or more persons. In fact, the appellant is providing services to their clients namely banks/colleges/university who are paying commission/fees to the appellant. The appellant is only facilitating the aspirant student and introduced them to the college and if these students gets admission to the college, the appellant gets certain commission which is in nature of promoting the business of the college and for referring investors borrow loan from foreign based bank to the people who wishes settled in Canada on that if the deal matures, the appellant is getting certain commission. So the nature of service provided by the appellant is the promotion of business of their client, in terms, he gets commission which is covered under Business Auxiliary Service which is not the main service provided by the main service providers namely banks/university. As the appellant did not arrange or facilitate main service i.e. education or loan rendered by colleges/banks. In that circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Punjab and Haryana in Genpact India Pvt Ltd versus Union of India, 2023 (68) GSTL 3 (P H) where the primary issue was whether the petitioner would be covered under the expression intermediary as defined under the provisions of the IGST Act and whether the services rendered by the petitioner under the agreement be treated as intermediary services . The observations of the High Court are clearly applicable in the present case and the relevant paras are quoted below : 28. As per definition of intermediary under Section 2(13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an intermediary ; - 29. First, the relationship between the parties must be that of a principal-agency relationship. Second, the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. Third, the person must not actually perform the main service intended to be received by the service recipient itself. Scope of an intermediary is to mediate between two parties i.e. the principal service provider (the 3rd party) and the beneficiary (the agents principal) who receives the main service and expressly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n lieu of the said export services and observed as under: 33. In terms of sub-section (8) of Section 13 of the IGST Act, the place of supply of certain services would be the location of the supplier of the services. In terms of clause (b) of sub-section (8) of Section 13 of the IGST Act, the place of supply of intermediary services is the location of the supplier of services. In the present case, the place of supply of services has been held to be in India on the basis that the petitioner is providing intermediary services. As discussed above, the Services rendered by the petitioner are not as an intermediary and therefore, the place of supply of the Services rendered by the petitioner to overseas entities is required to be determined on basis of the location of the recipient of the Services. Since the recipient of the Services is outside India, the professional services rendered by the petitioner would fall within the scope of definition of export of services as defined under Section 2(6) of the IGST Act. 34. There is no dispute that the recipient of Services - that is EY Entities - are located outside India. Thus, indisputably, the Services provided by the petitioner would fall w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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