The Delhi High Court has held that education consultancy, marketing and recruitment support services rendered by an Indian entity to foreign universities do not fall within “intermediary” services under Section 2(13) of the IGST Act merely because Indian students are incidentally assisted, or because the consideration is structured as commission.
The Court explained that where the foreign university is the contractual recipient, the foreign university pays the consideration, and the Indian entity supplies services on its own account without authority to bind the university, the services qualify as export of services. Accordingly, the Court directed that the refund be processed and granted to the petitioner together with applicable statutory interest, in accordance with law.
The Division Bench comprising Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul observed that where an Indian entity renders educational consultancy/marketing services to foreign universities, raises invoices on them, and receives consideration from them, such services do not become intermediary services merely because students in India are incidentally assisted in the process.
The Bench further observed that a person supplying services on its own account cannot be treated as an intermediary merely because the services facilitate or further the business objective of the foreign recipient. The determinative factors are the contractual recipient of the service, the person liable to pay consideration, and the nature of the service supplied.
The Bench found that the petitioner had entered into agreements with foreign universities, promoted their courses, identified prospective students, assisted in admissions, did not charge students, had no authority to bind the universities, could not guarantee admission, and received consideration from the foreign universities.
Briefly, the petitioner had sought refund of Rs. 2.63 crores along with interest, on the ground of “Export of Services — with Payment of Tax” and related to IGST paid for the period September 2023 to March 2024 under Section 54 of the CGST Act. In support, the petitioner relied on service agreements with foreign universities, export invoices, e-BRCs/FIRCs, reconciliation statements and other documents.
The department issued a show cause notice requiring, among other things, copies of service agreements with foreign recipients, inward supply invoices, proof correlating foreign remittances with export invoices, self-certified BRCs/FIRCs, and material to show that the services were not intermediary services under Section 2(13) of the IGST Act.
The petitioner replied with pending e-BRCs, reconciliations and sample export invoices, but the refund application was rejected on the ground that the petitioner was promoting courses of foreign universities, identifying prospective students, assisting in recruitment, and receiving commission linked to tuition fees, and was therefore an “intermediary” under Section 2(13) of the IGST Act rather than an exporter of services.
Appearances:
Advocates Kamal Sawhney, Deepak Thackur and Rishabh Mishra, for the Petitioner/ Taxpayer
Anushree Narain, Sr. Standing Counsel with Naman Choula and Yamit Jetley, Advocates, for the Respondent/ Revenue
