The Rajasthan High Court (Jaipur Bench) recently clarified that for someone to be called an “Intermediary”, there needs to be the existence of three parties in the contract. Since, in the present case, the services have been rendered between only the petitioner and its holding company IDP Australia, under a specific contract, the High Court declares that the said rendition of services between this non-resident holding company and its Indian subsidiary qualifies as an ‘export’.
The Court also clarified that simply because the petitioner has facilitated and arranged placement services between the Foreign Universities, IDP Australia, and the students, it shall not render it as ‘intermediary’, when the petitioner has no say in the final admission process, nor do they have any contractual arrangement with the Foreign Universities, and their services are only rendered to IDP Australia under a bi-partite arrangement.
The High Court therefore allowed the petition in favour of the taxpayer, and remanded the matter to the Adjudicating Authority for processing the refund claim in terms of this order and paying the refund amount, along with applicable interest, within a period of four weeks, to the petitioner.
The Division Bench comprising the Chief Justice K.R. Shriram and Justice Maneesh Sharma referred to the definition of the term ‘intermediary’ under Section 2(13) of the IGST Act, to observe that only that person who is a broker, agent, or by whatever name called, who arranges or facilitates, inter alia, the supply of services between two or more persons, qualifies as ‘intermediary’.
Since the definition under Section 2(13) specifically excludes a person who supplies any service on their own account, and the petitioner in the present case is not engaged in arranging or facilitating any service but is engaged in providing service by itself to IDP Australia, the Bench pointed out that the petitioners are outside the ambit of the term ‘intermediary’, as defined under the IGST Act.
The Bench also found that for the pre-GST period, the petitioner was confronted with a similar dispute, where the CESTAT vide its Order dated October 28, 2021, had categorically held that the services rendered by the petitioner did not qualify as intermediary and upheld the export status of the same. Further, the CBIC vide its Circular dated 20th September 2021 has observed that there is broadly no change in the scope of intermediary services in the GST regime vis-à-vis the Service Tax regime.
Briefly, in this case, the petitioner, a subsidiary of a publicly listed Australian Company, IDP Australia, entered into agreements with various Foreign Universities, inter alia, to assist aspiring students with enrolment in these Foreign Universities. The IDP Australia was paid a certain percentage of the student’s fee as consideration for providing such services to Foreign Universities. To meet its obligation towards the Foreign Universities, IDP Australia has further entered into a separate service agreement with the petitioner, whereby the petitioner provided students’ placement services, including guidance of courses, qualification requirements & counselling. Accordingly, 77% of the application processing fee received by IDP Australia was paid to the petitioner in discharge of the services rendered.
Since the services provided by the petitioner to IDP Australia are on a principal-to-principal basis, and the entire arrangement is akin to sub-contracting of services by IDP Australia to the petitioner, the petitioner classified the services supplied by it to IDP Australia as export of services as defined under Section 2(6) of the IGST Act, 2017, and claimed refund of IGST paid for such zero-rated supply as per Section 16(3)(b) of the IGST Act. The Department was, however, of the view that the petitioner’s services qualify as intermediary, and therefore, the place of its supply would be the location of the petitioner, that is, in India. Hence, the petitioner was denied export status and consequently denied the refund of the IGST.
Case Relied On:
IDP Education India Pvt Ltd. Vs. Union of India & Ors – 2025 (5) TMI 729, Bombay High Court
Appearances:
Advocates Prasad Pranjape and Nitin Jain, for the Petitioner/ Taxpayer
AAG Bharat Vyas, along with Advocates Sandeep Pathak, Palash Gupta, and Niti Jain Bhandari, for the Respondent/ Revenue
