JBIMS Placement Levy Fails

The dispute concerned service tax demands raised against Jamnalal Bajaj Institute of Management Studies for the period 2006-07 to 2007-08 on the allegation that placement-related activities conducted during campus recruitment amounted to “Manpower Recruitment or Supply Agency Service” under Section 65(105)(k) of the Finance Act, 1994. 

The Department sought to classify placement fees collected from students as taxable consideration for recruitment services.

The adjudicating authority originally dropped the demand by relying upon the Delhi Tribunal ruling in Motilal Nehru Institute of Technology. However, the Commissioner (Appeals) reversed the order and relied upon CBEC Circular No. 96/7/2007-ST dated 23.08.2007 to hold that IITs, IIMs, and similar educational institutions would be liable to service tax on placement-related activities under manpower recruitment services.

The Tribunal set aside the appellate order after holding that the essential ingredients of the taxable entry were absent. It observed that the statutory scheme contemplates services rendered to employers or prospective employers and not services rendered to students. 

Since the educational institution merely facilitated interaction between students and recruiters, while consideration flowed only from students and not from employers, the activity fell outside the scope of the charging provision. The Tribunal further clarified that executive circulars cannot enlarge the scope of taxable entries beyond the statute itself.