Support and Student Recruitment Services Rendered to Foreign Universities are Not Intermediary Services: Delhi HC

The Delhi High Court has held that support and student recruitment services to foreign universities qualify as exports of services under Rule 6A of the Service Tax Rules, 1994, because the service recipients are foreign universities located outside India. Upholding the CESTAT’s order, the Court dismissed the appeal filed by the GST department.

The respondent, M/s T C Global India Pvt Ltd, had a contract with at least 244 foreign universities across the world, including the University of Technology, Sydney, Brunel University of London and the American University of Barbados. The respondent provided services including arranging recruitment of students, giving information, helping in the application process and advising about the tuition fee payment, helping with the issuance of visas, accommodation, etc.

The respondent earned commission in foreign exchange and was not paying service tax, which resulted in the issuance of an SCN demanding a service tax of Rs 15,58,58,003 along with interest and penalties under the Finance Act, 1994.

The GST department claimed that the services provided by the Respondent is taxable and qualify as intermediary services, as the services of the respondent are given to foreign clients and the commission is earned in foreign exchange. The respondent filed an appeal before the CESTAT.

The CESTAT, however, allowed the appeal of M/s T C Global India Pvt Ltd and held that the services provided to over 244 foreign universities qualify as export of services and are exempt from service tax. It criticised the adjudicating authority, saying that it wrongly applied Rule 9 of the Place of Provision of Services Rules, 2012 (POPS). Therefore, the Department filed a petition before the Delhi High Court.

The Court cited Rule 2(f) of the POPS Rules and Section 2(13) of the IGST Act, which say that an intermediary only arranges or facilitates the supply of services or goods, and a person who supplies services on his own account is not an intermediary. In the present case, the respondent directly provided services to foreign universities. The Court also observed that the place of provision is outside India, making the service an export.

Many previous judgments, including decisions in India Pvt. Ltd v. Asstt. Commr. and Ernst & Young Ltd v. Addl. Commr., also state that the service provider is not an intermediary if they provide services directly. Based on these findings, the High Court upheld the CESTAT’s order and dismissed the appeal filed by the GST department, holding that the respondent’s services are an export of services, not intermediary services.