Foreign University Agent Not 'Intermediary' Without Tripartite Arrangement: CESTAT Chandigarh

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 18 August held that an overseas education consultant cannot be treated as an “intermediary” merely because it acts as an agent of foreign universities and receives commission from them.

A Bench comprising Judicial Member S.S. Garg and Technical Member P. Anjani Kumar, dismissed the Revenue's appeal against Trivedi Overseas Education Services, holding that where there is no tripartite arrangement and only one service is involved, merely describing the consultant as an “agent” does not make it an intermediary. It held:

“As there is no tripartite agreement and as there is no involvement of more than one service, the respondents cannot be treated as intermediary just because they are labelled as an agent and are receiving commission.”

Trivedi Overseas Education Services helped Indian students secure admission to foreign universities and educational institutions and received commission from the foreign universities for these services.

The Revenue treated Trivedi Overseas Education Services as an intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012. A service tax demand along with an equal penalty was confirmed against it. However, the Commissioner (Appeals) set aside the demand, following which the Revenue approached the Tribunal.

Before the Tribunal, Trivedi Overseas submitted that students paid their fees directly to the universities and that no part of the fees passed through it. It also submitted that it did not issue invoices to students and raised invoices only on the foreign universities.

The Tribunal relied on its earlier decision in Oceanic Consultants Ltd., where it had held that an intermediary arrangement requires the involvement of at least three parties. It also referred to the CBIC Circular, which provides that intermediary services generally involve a minimum of three parties and two distinct supplies.

It further criticised the Revenue for arguing that its earlier ruling in Sunrise Immigration Consultants had no precedential value after the Department itself had chosen not to challenge that decision. It observed that questioning the Commissioner (Appeals)'s reliance on the ruling after deciding not to appeal against it amounted to seeking a review of the Tribunal's own order and was contrary to judicial discipline.

On the commission received from domestic educational institutions, the Tribunal noted that the amounts were within the Rs. 10 lakh exemption threshold under Notification No. 33/2012-ST. It further held that the value of exported services could not be included while computing the threshold.

Accordingly, the CESTAT held that no service tax was payable on the domestic commission and dismissed the Revenue's appeal.

Appearances: Shri S.K. Meena, Authorized Representative for the Revenue; Ms. Sonia, Chartered Accountant for Trivedi Overseas Education Services.