The Mumbai Bench of the Customs Excise & Service Tax Appellate Tribunal has held that educational institutions are not liable to pay service tax on placement fees collected from students for campus recruitment activities, ruling that such activities do not fall under the category of “Manpower Recruitment or Supply Agency Service.” 

The Bench of Ajay Sharma (Judicial Member) and A.K. Jyotishi (Technical Member) has noted that the institute merely facilitated interaction between students and recruiters and did not undertake recruitment on behalf of employers. Importantly, no consideration was received from recruiting companies; the fees were collected only from students. 

The dispute related to the period from 2006-07 to 2007-08, during which the department had issued a show cause notice demanding service tax of ₹5.33 lakh along with interest and penalties. The tax department alleged that the institute was providing taxable “Manpower Recruitment or Supply Agency Service” by facilitating campus placements and charging fees from students. 

Initially, the Adjudicating Authority had dropped the demand by relying on an earlier Tribunal ruling in the case of Motilal Nehru Institute of Technology. However, the Commissioner (Appeals) later reversed that order and held the institute liable for service tax, relying on CBEC Circular No. 96/7/2007-ST dated 23.08.2007. According to the department, institutions like IITs and IIMs providing campus placement services were covered within the scope of manpower recruitment services. 

Before the Tribunal, the institute argued that the issue had already been conclusively settled by the Tribunal’s final decision in Motilal Nehru National Institute of Technology vs. CCE & ST, Allahabad, where it was held that placement-related activities undertaken by educational institutions are not taxable when the fees are collected from students and not from recruiting companies. 

The Tribunal examined the definition of taxable service under Section 65(105)(k) of the Finance Act, 1994 and observed that the provision contemplates a service rendered to a “client,” namely an employer or prospective employer, in relation to recruitment or supply of manpower. 

Referring extensively to the Motilal Nehru National Institute of Technology ruling, the Tribunal reiterated that for a service to qualify as manpower recruitment service, the recipient of the service must be an employer or prospective employer, and the consideration must flow from such employer to the service provider. 

The Bench further clarified that the CBEC Circular relied upon by the Revenue applied to situations where educational institutions charge placement fees from recruiting companies and not where charges are collected from students. 

The Tribunal also relied on its earlier decision in Sydenham Institute of Management, where similar placement activities were held to be outside the scope of taxable manpower recruitment services. 

The Tribunal made an important observation on interpretation of taxing statutes. It stated that tax provisions must be interpreted strictly and nothing can be added beyond the clear language of the statute. The Bench held that executive circulars cannot expand the scope of a charging provision under tax law. 

The Tribunal set aside the impugned order and allowed the appeal with consequential relief.

Case Details

Case Title: Jamnalal Bajaj Institute Of Management Studies Versus Commissioner Of CGST, Mumbai South

Citation: JURISHOUR-1143-CES-2026(MUM) 

Case No.: SERVICE TAX APPEAL NO. 86651 OF 2017

Date: 06.05.2026

Counsel For  Appellant:  M.Dwivedi, Advocate

Counsel For Respondent: S.B.P.Sinha (AR)

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