No service tax on fees for campus interviews: CBEC

The Central Board of Excise and Customs today clarified that educational institutes like IITs and IIMs were not liable to pay service tax under the category of "manpower recruitment or supply service" on the fees charged from prospective employers like corporates, who come to these institutes for recruiting candidates through campus interviews.

"These institutes were not liable to pay service tax prior to May 1, 2006 under the category of 'manpower recruitment or supply service'. As regards the period after May 2006, decision should be taken after taking into account all material facts on case to case basis," a circular issued by the CBEC said.

The circular has been issued since a doubt had been raised as to whether these educational institutes fall in the category of 'manpower recruitment or supply agency' and accordingly, whether service tax is leviable on this fee.

The CBEC in its circular pointed out that the principal activity of institutes like IITs or IIMs is to impart education without the objective of making profit.

Therefore, these institutes cannot be called a commercial concern, even if on some of their activities (like holding campus interviews), they charge fee.

"It is not one / few isolated activities which determine whether or not an institution is a commercial concern. It is the totality of its activity and the objective of its existence that determines the commercial nature of an institution as an 'entity' or a 'concern'," the circular said.

As per the provisions of the Finance Act, 1994, the "taxable service means any service provided or to be provided to a client, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner."

The definition of 'manpower recruitment or supply agency', prior May 2006, was, "any commercial concern engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client."