Educational consultancy services provided to foreign universities for helping Indian students with admissions are considered an “export of service” and are not “intermediary services” under the IGST Act.
Issue
Do educational consultancy services, provided to foreign universities for facilitating the admission of Indian students (for which the consultant is paid a commission by the university), qualify as an “export of service,” or should they be classified as “intermediary services” under Section 2(13) of the IGST Act, 2017?
Facts
- An assessee provided educational consultancy services to Indian students to help them with the process of getting admission into various foreign educational institutions (FEIs).
- The assessee’s business model involved receiving a commission from the FEIs for each successful student admission that they facilitated.
- The assessee treated this service as an “export of service” because the recipient of their service (the FEI paying the commission) was located outside India. On this basis, they claimed a refund.
- The Revenue department, however, contended that the assessee was acting as an “agent” or “intermediary” for the foreign universities. Under the then-existing law (Section 13(8)(b) of the IGST Act), the place of supply for an intermediary is deemed to be the location of the supplier (India). This classification would make it a domestic supply, not an export, and thus ineligible for a refund.
Decision
The Delhi High Court ruled decisively in favour of the assessee.
- Relying on a series of consistent judgments on this very issue, including cases that have been affirmed by the Supreme Court, the court held that the assessee’s services were provided on a principal-to-principal basis directly to the foreign universities.
- The court found that the assessee was not merely “arranging or facilitating” a supply between two other parties (the university and the student). Instead, they were providing their own main service of consultancy, promotion, and student facilitation to the university. Therefore, they did not fit the legal definition of an “intermediary.”
- The court also took note of the recent 56th GST Council’s recommendation to omit Section 13(8)(b) altogether. This change, it observed, shows the government’s own intent to remove the ambiguity and treat such services as exports by default.
Key Takeways
- The “Three-Party” Test is Essential for an Intermediary: The legal definition of an “intermediary” requires a triangular arrangement involving three parties: a main supplier, a recipient of that supply, and the intermediary who arranges the main supply between the other two. If a person is providing their own, independent service on a principal-to-principal basis, they are not an intermediary.
- Providing the “Main Service” vs. Facilitating: In this case, the court found that the assessee was providing the main service of consultancy, promotion, and student facilitation to the university. They weren’t just a passive link passing information. This is a key distinction that prevents them from being classified as an intermediary.
- This is Now a Settled Legal Position: The High Court’s reliance on multiple strong precedents, including ones that have been affirmed by the Supreme Court, indicates that this issue is now largely settled law. Educational consultancy provided to foreign universities is generally treated as an export of service.
- Legislative Intent Can Guide Interpretation: The court’s reference to the recent GST Council’s recommendation is significant. It shows that courts are willing to consider the future direction of the law and the government’s own stated intent to correct ambiguities when they are interpreting a disputed provision.