The New Delhi bench of the Central Excise, Customs and Service Tax Appellate Tribunal has declared that the IDP Education does not have to pay Service Tax to recruit the students to Australian Universities. This is because the department failed to explicitly state that these services were to be an intermediary between the foreign universities and M/s IDP Australia.
M/s IDP Australia made an agreement with the foreign universities based on which they have to pay a percentage of the tuition fee that the students are paying them to IDP Australia for its services. In return, IDP Australia agreed to the “Student Recruitment Services Agreement” with the appellant-Company to help recruit Indian students.
The department declared that the appellant will have to pay service tax on the commission that IDP Australia provides them since they are providing the service of arranging and expediting recruitment and shortlisting of students in India while acting as a mediator between Foreign Education Service Providers, M/s IDP Australia and the students.
The Tribunal bench, which consists of Judicial member Mr Anil Chaudhary and Technical Member P V Subba Rao, said that the appellant enrols or facilitates students in India. However, it does not get any remuneration from the universities in Australia.
The Tribunal said that the students are recommended by an appellant in India who gets recruited or admitted by the university in Foreign Country. For this, IDP Australia gets paid by the Australian/Foreign universities. The appellant receives a share of that commission that is given from IDP Australia. This arrangement scheme portrays that IDP Australia is rendering services to the foreign universities, and it is receiving consideration in return for it as observed by the Tribunal. When it comes to student recruitment in India, IDP Australia has declared that the appellant will be a fully owned subsidiary. Furthermore, it has also sub-contracted this work to the appellant.
