Commission for Foreign University Admissions Not Classified as Intermediary Service: CESTAT Chandigarh Rules in Favour of Education Consultant
Background and Overview
A significant ruling has emerged from CESTAT Chandigarh in the service tax dispute involving M/s Trivedi Overseas Education Services, where the Tribunal dismissed the Revenue's appeal and confirmed the relief already extended by the Commissioner (Appeals). The case revolved around the core question of whether commission received by an Indian education consultancy — engaged in facilitating admission of Indian students into foreign universities and educational institutions — could be subjected to service tax by classifying it as an "intermediary service" under the service tax framework.
The order upheld the position that the label of "agent" in a contractual agreement does not automatically render a service provider an intermediary under the law, particularly when the structural prerequisites for intermediary classification are absent.
Facts of the Case
M/s Trivedi Overseas Education Services operated as a facilitator, assisting Indian students in securing admissions to various foreign universities, colleges, and educational institutions abroad. For this facilitation, the respondent received commission payments directly from the foreign universities and institutions — not from the students themselves.
Revenue initiated inquiry proceedings and took the view that the respondent was acting as an intermediary between Indian students and foreign universities/colleges/institutions within the meaning of Rule 2(f) of the Place of Provision of Services Rules, 2012 (POPS Rules, 2012). A show cause notice dated 23.04.2018, covering the period 01.07.2012 to 31.03.2017, along with a statement of case dated 01.02.2020, covering the period April 2017 to June 2017, were issued. The proposals stood confirmed with equal penalty vide Original-in-Original Order dated 15.12.2020 passed by the Joint Commissioner, Central GST, Jalandhar.
The respondent challenged this order before Commissioner (Appeals), CGST, Ludhiana, who allowed the appeal vide order dated 21.03.2023, setting aside the original order. Revenue then approached CESTAT Chandigarh.
Revenue's Contentions
The authorized representative for Revenue reiterated the following grounds:
- The agreements between the respondent and foreign universities/institutions explicitly described the respondent as an "Agent", and Commissioner (Appeals) failed to give due weight to this characterization.
- The respondent functioned as a "bridge" without whom students could not have obtained admissions, and an agent acting in such a capacity qualifies as an intermediary under
Rule 2(f)of POPS Rules, 2012. - The respondent could not alter the nature of the service being rendered; the commission was a fixed percentage of the fee paid by students, and the services were clearly identifiable.
- Commissioner (Appeals) erred in disregarding the fact that the service provider was located in India, which brought the services within the ambit of
Rule 3of the POPS Rules. - Reliance placed by Commissioner (Appeals) on the decision in Sunrise Immigration Consultants Pvt. Ltd. — Final Order No. A/62221/2018-CU (DB) dated 16.03.2018 — was flawed, since the Tribunal's decision in that case had been accepted by the Department only on monetary grounds, and therefore carried no precedential weight.
- The decision of the Delhi High Court in Indian Association of Tour Operators, relied upon in Sunrise Immigration Consultants, had been challenged before the Supreme Court — reported at 2018 (17) GSTL J1 16 (SC).