The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax on foreign consultancy income received from foreign universities for promoting business in India.
The bench of Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that Foreign universities, the service recipient, are located outside the taxable territory. Therefore, the place of provision of Foreign Consultancy Service is outside the taxable territory.
The intelligence was received in the Zonal unit of Directorate General of Excise Intelligence (DGCEI) indicating that the appellant who was earlier known as NN Chopra Consultants Pvt. Ltd. were not paying service tax on the commission received by them from the foreign universities/institutes, for arranging and facilitating provision of Student Recruitment Services to be provided in India to various foreign universities/institutes.
During further investigation, it was observed that the universities/institutes in Australia were registered as education service providers on Commonwealth Register of Institutions and Course for Overseas Students (CRICOC) to comply with the requirement of Education Services for Overseas Students (ESOS) Act, the National Code and the universities Australia Code of Practice.
The department found an opinion that the Australian university/institutes are required to render student recruitment services consistent with the specified norms. For providing such services they entered into agreement with the education agents formerly representing them under the national codes.
The appellant had also entered into such agreement with various foreign education service providers for arranging or facilitating recruitment of students as their education agent in lieu of a commission termed as agents fee/consultancy income from the activities agreed to be performed by the appellant.
Based on the one of such agreement department with Australian university department formed an opinion that the appellants were providing intermediary services of arrangement and facilitation of student recruitment services to foreign education service providers in India. It is alleged that the appellants were liable to pay service tax on the commission received by them for the said activity.Â
It is alleged that the said activity is taxable, however, the appellant have not paid the service tax. Resultantly a show cause Notice was served upon the appellant proposing a demand of service along with proportionate interest and the appropriate penalties. The proposal have been confirmed.
The assessee contended that Rule 9 of place of Provision of Rules, 2012 has wrongly been applied by wrongly presuming that the appellant while facilitating the students recruitment services to foreign education service providers, since is located in taxable territory and is recruiting students of taxable territory only, the location of service recipient is irrelevant. Learned Counsels impressed upon that it shall be Rule 3 of Place of Provision Rules, 2012 whereby the location of service receiver is relevant for deciding taxability shall be applicable. The appellant is the service provider hence shall not be liable to pay tax nor the appellant is an Intermediary.
The department contended that exemption benefit of Notification no. 25 of 2012, Entry No. 9 is also not available to the appellants because the said entry exempts the “Auxiliary Education Services‟ whereas the appellants is providing “Intermediary Services‟. For the same reason, the activity of the appellant cannot be called as “Export of Service‟. Hence it is rule 9 of Place of Provision of Service Rules, 2012 which is applicable with respect to Intermediary Service Provider.
The tribunal held that the intent to evade tax is must in any of the actions of the assessee. NNCCPL has been registered with the Service Tax department and has been filing its service tax returns regularly. Payment of Service Tax as applicable on them has clearly been discharged by them vis- Ã -vis domestic consultancy Income and Coaching Services. The appellant is held not liable to pay service tax with reference to foreign Consultancy Income i.e. the income received from foreign universities for promoting and publicizing their business in India, as discussed above.
The CESTAT held that there is no evasion of tax, question of having any intent to evade is redundant when the tax is already paid. Thus we hold that the show cause notice is barred by time.
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Case Details
Case Title: TC Global India Pvt. Ltd. Versus Additional Director General, DGCEI, New Delhi
Case No.: Service Tax Appeal No. 51355 of 2017
Date: 13/12/2024
Counsel For Appellant: B.L. Narasimhan & Shri Kunal Agarwal
Counsel For Respondent: Jayakumari
