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ST - Placement fees collected from students covers expenses for organizing campus interview - recipient client must be prospective employer & consideration must flow from such employer - Not taxable under Manpower Supply services: CESTAT

By TIOL News Service

MUMBAI, MAY 19, 2016: THE issue is regarding taxability of the amount collected by the appellant from the student as placement fees.

Revenue is of the view that the said amount is taxable under 'Manpower Recruitment and Supply Agency Services'.

The Service tax liability was confirmed along with interest and penalties by the lower authorities.

In appeal before the CESTAT, the appellant submitted that they are Government of Maharashtra aided institute incorporated in the year 1983 and conduct courses in Masters in Management Studies and Post Graduate Diploma in Business Management recognized by University of Mumbai and Government of Maharashtra respectively. It is further submitted that the amount collected as placement fees from the students is nothing but amount to defray the expenses incurred by the Institute for organizing the campus interview, etc. Inasmuch as in the case of Motilal Nehru National Institute of Technology - 2015-TIOL-2975-CESTAT-ALL, on an identical issue, the demand was set aside and held in favour of the assessee.

The Bench noted that the issue is no more res integra.

Holding that the judgment of the Tribunal in the case of Motilal Nehru National Institute of Technology (supra) is very relevant, the Bench reproduced paragraphs No. 5 and 6 of the order and after setting aside the impugned order, allowed the appeal.

In passing : Paragraph 6 of the referred order is reproduced below -

"6. From the definition and the enumeration of this activity as a taxable service, it is clear that what is taxable is the rendition of any service towards recruitment or supply or manpower, temporarily or otherwise to a client. The recipient of this service is a client who receives services in the nature of recruitment of supply of manpower, temporarily or otherwise. The recipient client must thus be an employer or prospective employer and the consideration for this service must flow from such employer to the provider of the service. The placement facilitation provided by educational institutions whereunder the placement charges are collected from students and not from an employer or a prospective employer, do not, on a fair and reasonable interpretation of the taxable service as defined in the Act, fall outside the purview of either the  definitional  or enumerative  provision of the Act."

(See 2016-TIOL-1189-CESTAT-MUM)


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