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TMI Blog2025 (5) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... nal 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. 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. In both the cases, the appellant is paid consultation fees in convertible foreign exchange either by the foreign universities or by the group entities on the basis of the cost incurred by the appellant. The appellant was classifying its activities as export of services in its ST-3 Returns and was, therefore, not paying any service tax. 3. Pursuant to an investigation, show cause notice dated 19.07.2022 was issued for the period October 2016 - June 2017, on the allegation that appellant is acting in representative capacity for its customers, i.e., the foreign universities, while dealing with the students and was, therefore acting as an agent or broker. According to the Department, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 to 12 provides the place of provision of specified services. Rule 14 provides for order of application of rules and therefore, Rules 4 to 12 were to apply first to ascertain whether a service would fall under either of these specific rules or else the general rule 3 would be applicable. In the present case, as per the appellant, it is rule 3 which is applicable which in general terms provides that the place of provision of service is the location of the service recipient, whereas according to the revenue it is Rule 9 (c) of the Rules which provides that the place of provision of the intermediate services shall be the location of the service provider, is applicable. The provision for export of service has been separately provided under Rule 6A which has been introduced by the Service Tax (Second Amendment) Rules 2012 by replacing Export Service Rules, 2005. In terms thereof, the basic facts to be ascertained is that the service recipients are foreign entities and they are located outside India and payment for such services has been received in foreign currency. 6. The CESTAT, Chandigarh in Sunrise Immigration Consultants P. Ltd. versus CCE & ST 2018 (5) TMI 1417 has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax to be levied in terms of Chapter V of the Act, the service has to be provided within the taxable territory. Coming to the next aspect of the services being provided outside the taxable territory, where the service provider is in India and the recipient of service is located outside India, the Apex Court in All India Federation of Tax Practitioners versus Union of India 2007 (7) STR 625 (SC) observed that in normal parlance, it would be 'export of service'. Further, it has been settled that the destination has to be decided on the basis of place of consumption and not the place of performance of service as laid down by the Larger Bench in Paul Merchants Ltd versus CCE, Chandigarh 2012(12) TMI 424-CESTAT-DEL-LB and affirmed by the High Court of Delhi in Verizon Communication, India Pvt Ltd versus Assistant Commissioner, ST, Delhi 2018 (8) GSTL 32 (Del.). Hence we reiterate the conclusion that the appellant satisfies the criteria as per Rule 6A of the Service Tax Rules, 1994 and cannot be imposed service tax on the services provided. 9. Coming to the second issue, whether the appellant can be treated as an 'intermediary', we may refer to its definition under Rule 2 (f) of the POP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... universities, which implies that the service provider is located in India and the recipient of services were located outside India. Referring to the agreement between Sannam S4 Management Services India Pvt Ltd. and Victoria University, Australia dated May 5, 2016, we find that the title of the agreement is "Consultancy Services Agreement" and Clause 6.2 refers to the nature of relationship, which is quoted below:- "6.2 Form of Relationship, Description of Services and Business Cards. 6.2.1. The legal relationship between the Client and Sannam S4 arising pursuant to this Agreement shall be that of an independent contractor. Nothing in this Agreement shall be construed as to render the relationship between the Client and Sannam S4 to be that of an employer/employee, principal/agent, partnership or joint venture. Unless authorized in writing by the client, Sannam S4 shall not have the right or authority to assume or create any obligation or responsibility, express or implied on behalf of or in the name of the Client, or to bind the client in any manner whatsoever except as may be specifically approved by the Client." 11. Further, Schedule-D provides the nature of services as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract with the foreign universities located outside India. As noted above, the various clauses of the agreement clearly points out that the service provider, the appellant and the recipient of service, the foreign university were working on principal to principal basis and therefore, the appellant is not 'facilitating' any service of the university to the students so as to fall within the definition of 'intermediary services'. In this regard, it may also be appreciated that the final decision of admitting a student is that of the foreign university. The appellant on the other hand is acting in its independent capacity as a business promoter and does not act as an agent of the university. The fact that the appellant is rendering services on its own account, it cannot be treated as an 'intermediary'. On the conclusion that appellant is not an 'intermediary', Rule 9 of POPS Rules will not be applicable and consequently Rule 3 would apply. 13. The present appeal also relates to the agreements between the appellant and the foreign group entities which, according to the Revenue is the main service provider and the appellant is only facilitating the provision of services by foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties has been considered by the Tribunal in the case of M/s IDP Educational India Pvt. Ltd. versus Additional Director General of Central Excise Intelligence, New Delhi 2021 (10) TMI 1174, where the appellant was a subsidiary of M/s IDP, Australia. The Australian Universities entered into an agreement with M/s. IDP, Australia, and paid a percentage of the tuition fee, which they received from the students to IDP Australia for its services. IDP Australia inturn had entered into "Student Recruitment Services Agreement" with the appellant to help the recruitment of students from India. In these facts, the Bench concluded as under:- "8. We have gone through the records of the case and considered the submissions on both sides. It is undisputed that the appellant has an agreement only with IDP Australia. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions, and there is no reason to differ from the same. 14. We would also like to discuss the decision in the case of M/s. Arcelor Mittal Projects India Pvt. Ltd. versus Commissioner of Service Tax, Mumbai-II 2023 (8) TMI 107 CESTAT Mumbai-LB, where the transaction is quite alike in the present case. The issue before the Larger Bench was whether the services provided by Arcelor Mittal Projects India Pvt. Ltd. would be export of service under the Export Rules, 2005. Briefly stated, Arcelor India was the subsidiary of Arcelor France, a commission agent for steel mills situated outside India, for procuring sale orders for the products manufactured by these mills from customers across the world. A part of the commission received by Arcelor France as the main agent from the foreign Mills was paid to Arcelor India as sub-agent. Relying on the Circular dated 29.04.2009, which clarified that the relevant factor is the location of the service receiver and not the place of performance, the relationship of service provider and service recipient between Arcelor India and Arcelor France was examined in the facts that for procuring sale orders for the products manufactured by the foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X
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