IDP Education India does not need to pay service tax to recruit students from foreign universities: CESTAT

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The Central Excise, Customs and Services Tax Appeals Tribunal (CESTAT), New Delhi, ruled that IDP Education India was not required to pay the service tax for the recruitment of students at Australian universities, as the department has not established that these services act as an intermediary between M / s IDP Australia and foreign universities.

M / s IDP, Australia has an agreement with foreign universities whereby, they pay a percentage of the tuition fees they receive from students at IDP Australia for its services. IDP Australia, in turn, entered into a “Student Recruitment Services Agreement” with the appellant company to help recruit students in India. The department considered that the appellant should pay a service tax on the commission received from IDP Australia, as they provide the service of organizing and facilitating the recruitment of students in India, as an intermediary between the suppliers foreign education services, M / s IDP Australia and students.

The Panel of the Tribunal composed of Judicial Member Mr. Anil Chaudhary and Technical Member PV Subba Rao observed that the Appellant recruits or facilitates students in India, but does not receive any remuneration from Australian universities.

“For students who are recruited or admitted by the university in a foreign country, recommended by the appellant in India, IDP Australia is paid by Australian / foreign universities. A portion of this commission is paid to the appellant by IDP Australia. This scheme of arrangement clearly shows that IDP Australia provides services to foreign universities and receives consideration for the same. Regarding the recruitment of students in India, IDP Australia created the appellant as a wholly owned subsidiary and subcontracted this work to the appellant, ”said the Tribunal.

In ruling in favor of the appellant, the Tribunal ruled that “nothing was recorded in the notice of cause or in the order to demonstrate that the appellant has a direct contract with the foreign universities. There is nothing in the record to indicate that the appellant liaises or acts as an intermediary between the foreign universities and IDP Australia. All that emerges from the files is that the Claimant is providing the services contracted out to him by M / s IDP Australia. As a subcontractor, he receives a commission from the project manager for his services. The prime contractor – IDP Australia, in turn, receives a commission from overseas universities that pay a percentage of the tuition fees to IDP Australia. From the records we find that Revenue has not established that the appellant is acting as an intermediary between M / s IDP Australia and the foreign universities, as alleged or retained in the impugned order and notice of justification.

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