IIM Bangalore Campus Recruitment Fees Taxable As Manpower Recruitment Services: CESTAT Bangalore

On 27 April 2026, the Bangalore Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that recruitment fees collected by the Indian Institute of Management Bangalore (IIMB) from corporates during campus placements are liable to service tax under the category of “manpower recruitment or supply agency services”, while participation fees are not taxable.

A Bench comprising Judicial Member Dr. D.M. Misra and Technical Member R. Bhagya Devi partly allowed the appeal, confirming service tax only on recruitment fees for the normal period along with interest, granting cum-tax benefit, and setting aside the levy on participation fees and penalties. It observed:

“the appellant charge recruitment fees from the corporate houses, business entities who visit the campus for recruitment of the qualified management graduates only in cases where the recruitment students is finalised and hence, the amount collected would definitely leviable to service tax under the category of 'Manpower Recruitment or Supply Agency' as clarified in the said Circular of the Board dated 23.08.2007.”

The dispute arose from show cause notices issued by the Service Tax Department for the period 2006–2010, alleging that IIM Bangalore rendered taxable services by facilitating campus recruitment and charging fees from companies. The Department raised a demand exceeding Rs. 1 crore along with interest and penalties, which was confirmed in adjudication and partly upheld in appeal.

IIMB contended that it is an institution of national importance primarily engaged in imparting education, and that campus placements form only an incidental activity. It submitted that the placement process is managed by a student committee and that recruitment and participation fees do not have a direct nexus with manpower recruitment services. It also relied on a bona fide belief based on earlier decisions and challenged the extended limitation period and penalties.

The Revenue relied on CBEC Circular No. 96/7/2007-ST dated 23 August 2007, which clarified that premier institutions like IIMs fall within the scope of manpower recruitment or supply agency services when they facilitate campus hiring. It argued that both recruitment and participation fees constitute taxable consideration.

The Tribunal held that recruitment fees are directly linked to successful placement of candidates and therefore fall within the taxable category of manpower recruitment or supply agency services. However, it held that participation fees, charged for allowing corporates to access campus infrastructure and participate in the recruitment process irrespective of hiring outcomes, are not liable to service tax.

The Bench agreed with the appellant that “the participation fees which is charged by the appellant from all the corporate houses for using the infrastructure facilities and involved in the process of selection of candidates, the amount paid as participation fees cannot be subjected to levy of service tax under 'Manpower Recruitment or Supply Agency Services'. Therefore, the amount collected as participation fees is not leviable to service tax under the said category.”

Accordingly, the CESTAT modified the impugned order, confirming service tax liability only on recruitment fees for the normal period along with interest, extending cum-tax benefit, and setting aside the demand on participation fees as well as all penalties.

For Appellant: N. Anand, Advocate

For Respondent: Vikalp Jain, Superintendent