The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), has set aside service tax demands along with interest and penalties, holding that services provided to overseas educational institutions amount to export of services and cannot be treated as intermediary services. The Tribunal was hearing appeals filed by Auscan Consultants India Ltd. and its Managing Director against a common order which had confirmed service tax demand along with interest and penalties, including a penalty of ₹50,000 on the Managing Director.
The appellant was engaged in providing promotional and facilitation services to foreign colleges and universities. Under agreements with overseas institutions, the company assisted students seeking admission abroad and received commission from the foreign universities upon successful enrolment of students.
The Department alleged that the appellant was providing “intermediary services” under Rule 2(f) of the Place of Provision of Services Rules, 2012, read with Rule 9, and therefore the place of provision of service was in India. On this basis, a show cause notice dated 02.06.2017 was issued demanding service tax for the period 2012–13 to 2015–16, along with interest and penalties. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld the order, leading to the present appeals.
Before the Tribunal, the appellant contended that the issue was no longer res integra and had been consistently decided in favour of assessees in several decisions. It was argued that the appellant was providing business promotion and support services to foreign universities on its own account and was remunerated by commission, and therefore could not be classified as an intermediary.
The Tribunal noted that the central issue was whether services rendered to foreign universities for commission were intermediary services or export of services. It observed that the issue had already been settled by multiple benches of the Tribunal, which had consistently held that such services amount to export of services and not intermediary services.
Referring to earlier decisions, the Tribunal reiterated that an intermediary is one who arranges or facilitates the main service between two or more persons, whereas the appellant was providing services directly to foreign clients who paid commission. It observed that the appellant “did not arrange or facilitate main service i.e. education rendered by colleges,” and was instead promoting the business of its clients. The Tribunal further held that since the appellant was providing services to clients located outside India and was receiving consideration in foreign exchange, the services qualified as export of services.
Following the settled position of law, the Tribunal held that the impugned order was not sustainable. Since the demand itself was set aside on merits, the Tribunal found it unnecessary to examine other issues relating to limitation and penalties. Accordingly, both appeals were allowed, the impugned order was set aside in entirety, and consequential relief was granted to the appellants as per law.
Cause Title: M/s Auscan Consultants India Ltd Versus Commissioner of Central Excise and Service Tax, Chandigarh-I
Case No.: Service Tax Appeal No. 61091 of 2019
Coram: S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member)
