Let’s be honest — the word “intermediary” under GST has become a nightmare for businesses exporting services. Refunds get stuck, notices keep coming, and officers often say just one thing:
“You are working for your foreign parent. You must be an intermediary.”
The Gujarat High Court, in Infodesk India Pvt. Ltd. v. Union of India (SCA No. 13176 of 2025), has stepped in and said “not so fast statements”. This judgment is important because it talks the language of business reality, not just legal definitions.
Let’s walk through it slowly and practically.
The real‑world setup – what was the business actually doing?
Infodesk India Pvt. Ltd. is an Indian subsidiary of a US company. Its job was not glamorous front‑end sales. Instead, it handled the actual heavy lifting:
- Software consultancy
- Content integration using AI and human analysis
- IT infrastructure support
- Editorial and research work
- Customer support and reporting
In simple terms, work was done in India, invoices were raised on the US parent, money came in foreign currency, and GST refunds were claimed.
Sounds like export of services, right? Well, the department didn’t think so.
Why did GST authorities reject the refund?
The department rejected the refund for two common reasons that many exporters face:
“Your refund is time‑barred”
The officer said that although the refund was filed online within time, the physical documents were submitted later — so the refund was beyond Section 54 of the CGST Act, 2017.
“You are an intermediary, not an exporter”
According to the department:
- The Indian company was assisting its foreign parent
- Some clauses in the agreement mentioned liaison / consultancy
- Therefore, it was facilitating services and not supplying services on its own account
Hence, no export, no zero‑rating, no refund.
Let’s pause and understand the law
What is “export of services”? – Section 2(6) of IGST Act
For a service to qualify as export, all five boxes must be ticked:
1. Supplier is in India
2. Recipient is outside India
3. Place of supply is outside India
4. Payment received in foreign currency
5. Supplier and recipient are not the same establishment
If these are satisfied, the supply becomes zero‑rated under Section 16 of IGST Act.
Simple example:
An Indian IT company providing backend development to a US company and getting paid in USD is exporting services.
What exactly is an “intermediary”? – Section 2(13) of IGST Act
An intermediary is not someone who does the main work. It is someone who:
- Connects two parties
- Arranges or facilitates a supply
- Earns commission or fee for coordination
Classic example:
A commission agent who connects an overseas client with an Indian vendor.
Important point:
If you are doing the work yourself and billing for it, you are not an intermediary.
What did the High Court actually look at?
Instead of blindly reading definitions, the Court asked one practical question:
“What is the true nature of the service agreement?” And once the agreement was examined, the picture became very clear.
Key facts from the agreement
- Only two parties were involved (Indian company & US parent)
- Services were provided directly, not through someone else
- Payment was cost + 8% markup (yes, profit!)
- Indian company bore its own expenses, risks, and taxes
- Disputes were contractually arbitrable — like any independent contractor
This is principal‑to‑principal, not agency.
The biggest myth busted by the Court
“If you are a subsidiary, you are automatically an intermediary.” The Court clearly rejected this thinking.
Being a 100% subsidiary does not matter. What matters is:
- Are you supplying services on your own account?
- Or are you merely arranging services between two others?
Infodesk India was doing the work itself. There was no third party whose supply was being facilitated. “So the intermediary tag failed”.
CBIC Circular also supports exporters
The Court relied on CBIC Circular No. 159/15/2021‑GST, which clarifies:
- Back‑end support services
- IT and software development services
- Consultancy provided on own account
are NOT intermediary services.
If you are not earning commission for arranging someone else’s supply, you are generally safe.
What about the limitation issue? A big relief here too
The Court said something very practical:
“If the refund application is filed online within two years, the taxpayer cannot be punished for procedural delays.”
Circulars cannot override Section 54 of the CGST Act.
Why this judgment matters to you
If you are:
- An Indian subsidiary of a foreign company
- Providing IT, software, research, analytics, or support services
- Working on a cost‑plus model
This judgment is a strong shield against wrongful intermediary classification.
Final words practical, not theoretical
This ruling reminds the department that GST should follow business reality. Labels don’t matter. Substance does.
If your agreement shows:
- Independent execution
- Direct billing
- No facilitation between third parties
Then you are exporting services — not acting as an intermediary. And yes, your GST refund deserves to be paid.
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