Supreme Court Conclusively Settles “Intermediary” Dispute for Education Consultants
1. The Core Dispute: Agency vs. Independent Export
The Revenue challenged the GST refund claims of Indian educational consultancies (like Global Opportunities and KC Overseas).
The Revenue’s Stand: They argued that these consultants were “Intermediaries” under Section 2(13) of the IGST Act because they facilitated the supply of educational services between foreign universities and Indian students. As intermediaries, the “Place of Supply” would be India (Section 13(8)(b)), making the commission taxable at 18%.
The Assessee’s Stand: They argued they provided independent marketing and recruitment services directly to foreign universities on a “Principal-to-Principal” basis. Since the service recipient was abroad and payment was received in foreign exchange, it qualified as a Zero-Rated Export.
2. The High Court & Supreme Court Rulings
The Delhi High Court (upheld by the Supreme Court) provided a definitive interpretation of the law:
I. No Facilitation of Third-Party Supply
The Court observed that the consultants supplied services on their own account. They were not “arranging” the university’s education service; rather, they were providing a direct promotional service to the university to help it find suitable candidates.
II. Recipient vs. Beneficiary
A crucial distinction was made:
Recipient: The foreign university (who is contractually liable to pay the commission).
Beneficiary: The Indian student (who receives the end benefit of admission).
GST law recognizes the legal recipient for determining the “Place of Supply.” Since the university is outside India, the service is an export under Section 13(2).
3. Final Order and Refund Mandate
The Supreme Court dismissed the Revenue’s Special Leave Petition (SLP), reinforcing the High Court’s judgment.
Refund with Interest: The Revenue is mandated to refund the accumulated GST along with statutory interest (as per Section 56).
Time Extension: While upholding the refund, the Supreme Court granted the Department an extension of two months to complete the actual disbursement process.
Elimination of Confusion: The High Court noted that legislative intent (including recent GST Council recommendations) aims to remove the “intermediary” tag from such export-oriented services.
Key Takeaways for Service Exporters
Contractual Clarity: To avoid the “intermediary” trap, ensure your agreements are bipartite (between you and the foreign entity) and clearly state that services are provided on a principal-to-principal basis.
No Fee from Students: A major factor in the assessee’s favor was that they did not charge the students any fees; their entire consideration came from the foreign universities.
Interest on Delay: If your refund has been pending due to this specific “intermediary” dispute, you are entitled to 6% interest starting 60 days after your initial application.