The Delhi High Court ruled that the services rendered by an Indian educational consultant to the foreign educational institutions and the earnings received therefrom in foreign exchange would not constitute ‘intermediary services’. Emphasizing that the GST Council in its 56th meeting had also recommended the omission of Clause (b) of Section 13(8) of the IGST Act to help Indian exporters to claim export benefits, the Court clarified that ‘intermediary services’ are no longer services for which the place of location of the supplier would be deemed as the place of supply.
Since the prevalent confusion relating to intermediaries and their entitlement to claim benefits based on the export of services has been eliminated by the GST Council itself, the Court ordered for grant of refund of the GST paid by the Indian educational consultant (Respondent) on the export of services, along with the applicable statutory interest in accordance with law within two months.
Reference was also made to the definitions of ‘export of services’ under Section 2(6), ‘intermediary’ under Section 2(13) of the IGST Act, and Section 13(8) of the IGST Act, which stipulates the ‘place of provision of services’.
The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that the educational consultancy (Respondent) was not acting on behalf of any Foreign Educational Institutions (FEI), and rather, was engaged by the said FEI for providing consultancy services to students in India. Upon the said students obtaining education, the Respondent raises invoices in either Indian Rupees or foreign currency on the FEI, and then receives foreign exchange payment from the said university.
The Bench therefore emphasized that the relationship between the Respondent and the university or the FEI cannot be held to be an ‘intermediary service’ as the Respondent is working as an educational consultant and may be rendering services which may further the cause of the FEI, but is not an agent of the said FEI.
Briefly, in this case, the Respondent is engaged in the business of providing educational consultation to Indian students who intend to travel abroad to pursue higher education in foreign universities. Accordingly, the Respondent had agreements with foreign universities, as per which, students, by resorting to such services of the Respondent, can seek admission in the relevant Universities. If the University accepts the said students for admission for any particular course, the Respondent is paid a commission in terms of the agreement executed between them.
Now, the case of the Department and the point of dispute was that the Respondent is nothing but an ‘intermediary’ in terms of Section 2(13) of the IGST Act, and hence, not qualified for exemption from payment of GST under Section 5 of the IGST Act as the Respondent’s services do not constitute ‘export of services’. As such, the refund claimed by the Respondent on the taxes paid on export of services was rejected.
Appearances:
Advocates Sameer Vashisht, Urvi Mohan, Naman Jain, Deepak Kumar, for the Petitioner/ Revenue
Senior Advocate Tarun Gulati, along with Advocates Sparsh Bhargava, Ishita Farsaiya, Vanshika Taneja, and Riddhi Vasistha, for the Respondent/ Taxpayer
