Export of Services vs Intermediary Under GST – Principal-to-Principal Service Contracts Qualify as Export of Services
The Rajasthan High Court, in the case of IDP Education India Pvt. Ltd. v. Union of India & Ors., ruled that services provided under a principal-to-principal contract to a foreign entity are classified as ‘export of services’ and are not ‘intermediary’ services under Section 2(13) of the IGST Act. The petitioner, an Indian subsidiary, provided student placement and enrolment assistance to its Australian parent company (IDP Australia), which held agreements with foreign universities. The revenue department had denied the IGST refund, treating the services as ‘intermediary’ because they ultimately facilitated student admissions. The High Court, however, observed that the definition of an intermediary requires a person to arrange or facilitate a supply between two or more persons, meaning a three-party contractual link. Since the petitioner had a direct bilateral contract with IDP Australia and no contractual nexus with the students, the Court held that the petitioner supplied services on its own account to the foreign entity. The judgment aligns with earlier CESTAT precedents and the principle that the GST concept of an intermediary mirrors the service tax regime. Consequently, the Court set aside the denial orders and directed the authorities to process the petitioner’s IGST refund claims along with statutory interest.
Facts:
IDP Education India Pvt. Ltd. (“the Petitioner”), a subsidiary of an Australian publicly listed company, provided services related to student placements, course guidance, and enrolment assistance to IDP Australia. IDP Australia had agreements with foreign universities for assisting students with enrolments. The Petitioner received a percentage of application fees from IDP Australia for services rendered.
The Union of India and departmental authorities (“the Respondents”) treated the Petitioner’s services as intermediary services, contending the Petitioner merely facilitated placements and admissions and denied export status and IGST refund claims accordingly.
The Petitioner contended that the services were a plain principal-to-principal subcontracting from IDP Australia with no facilitation or arrangement role involving three parties, thus not falling within the definition of ‘intermediary’ under the IGST law. The Respondents contended otherwise.
Aggrieved by the denial of refund and classification as intermediary, the Petitioner approached the Rajasthan High Court through writ petitions under Article 226 of the Constitution.
Issue:
Whether the services rendered by the Petitioner to IDP Australia qualify as “intermediary” services under Section 2(13) of the IGST Act or as export of services, entitling the Petitioner to IGST refund?
Held:
The Hon’ble Rajasthan High Court in Civil Writ Petition No. 9933/2024 held as under:
- Observed that, the definition of intermediary under Section 2(13) IGST Act requires facilitation between two or more persons; the Petitioner supplied services on its own principal account to IDP Australia without facilitating third-party supply.
- Noted that, the Petitioner’s contract is bilateral with IDP Australia, with no contractual nexus with students, negating the intermediary classification.
- Noted that, the earlier CESTAT order dated October 28, 2021, which categorically held that the Petitioner’s services as non-intermediary and export, is a precedent accepted by the Revenue itself.
- Observed that, the Petitioner’s argument that CBIC Circular dated September 20, 2021, clarifies the definition of “intermediary” remains consistent from Service Tax to GST regime.
- Held that, since the Petitioner was deemed exporter in other jurisdictions, there was no reason for differing view and set aside impugned orders denying refund and directed the adjudicating authority to process refund claims with interest within 4 weeks.
Our Comments:
The Bombay High Court’s decision in IDP Education India Pvt Ltd v. UOI & ors [Writ Petition No. 5144 OF 2022 with Writ Petition No. 2774 OF 2024, order dated May 5, 2025] provides significant clarity on the definition of “intermediary” services under Section 13(8) of the IGST Act, 2017. The Court leaned heavily on the pre-GST CESTAT precedent favoring the assessee and its finality, reaffirming that the GST concept of intermediary mirrors the service tax regime. The decision rightly emphasizes that mere support services provided by a subsidiary to its foreign parent, facilitating Indian students in university admissions abroad, do not qualify as intermediary services. This aligns with the principle that the nature and substance of services must be examined rather than adopting a narrow technical approach. The ruling offers much-needed relief to education consultancies and similar exporters, affirming their entitlement to refunds and zero-rating under GST.
Further, the precedents of Commissioner of Service Tax III, Mumbai v. Vodafone India Ltd. [CA Nos. 10815-10819/2014, May 6, 2025] and Commissioner, Central Excise, CGST-Delhi South v. Blackberry India Pvt. Ltd. [SLP (C) No. 25992/2024, November 4, 2024] reinforce the principle that the existence of an agency or facilitation element is crucial for classifying a contract as intermediary. The courts have emphasized a substance-over-form test focusing on the contractual relationship, who receives and pays for the services, and the commercial reality. These rulings prevent the unwarranted denial of zero-rating or refunds on technical grounds, thereby ensuring that Indian service providers operating for foreign clients are not unduly taxed simply because the ultimate beneficiary is located in India.
It’s worth noting that the 56th GST Council Meeting held on 3rd September 2025 has recommended the omission of the specific place of supply provision for intermediary services under Section 13(8)(b) of the IGST Act, 2017. With this change, the determination of place of supply for such services will be governed by default provisions under Section 13(2), i.e., the location of the recipient, thereby restoring full export status and refund eligibility for Indian service providers supplying to foreign clients.
Relevant Provisions:
Section 2(13), IGST Act, 2017:
(13) “intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account”
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