In a decisive ruling that settles a long-standing interpretational conflict under GST law, the Supreme Court of India has affirmed that educational consultancy services provided to foreign universities on a principal-to-principal basis qualify as export of services and are consequently eligible for GST refund.
By upholding the Delhi High Court’s judgment in favour of Global Opportunities, the Court has authoritatively clarified the scope of the term “intermediary” under Section 2(13) of the Integrated Goods and Services Tax Act, 2017 (IGST Act). The ruling provides much-needed certainty to service exporters operating in the overseas education facilitation space.
Background of the Dispute
The assessee, Global Opportunities, is engaged in providing educational consultancy and student recruitment services to foreign universities. Under contractual arrangements, the company assisted universities in identifying and enrolling suitable Indian students. Upon successful admission, the foreign universities paid consideration to the assessee in foreign exchange.
Despite these features, the GST department rejected refund claims on the premise that the assessee acted as an “intermediary”, thereby attracting a different place-of-supply rule and disqualifying the services from export treatment. The core allegation was that the assessee merely facilitated supply between Indian students and foreign universities.
Statutory Context: Intermediary vs Export of Services
Under GST law, classification as an intermediary has historically carried adverse consequences because:
- the place of supply is deemed to be the location of the supplier, and
- export benefits, including zero-rating and refund of unutilised ITC, become unavailable.
The controversy has largely revolved around Section 2(13) of the IGST Act, which defines an intermediary as a person who arranges or facilitates the supply of goods or services between two or more persons but does not supply such goods or services on own account.
Findings of the Delhi High Court
The Delhi High Court rejected the department’s position and held that:
- The assessee rendered services on its own account to foreign universities.
- The relationship was principal-to-principal, not that of an agent or broker.
- The mere fact that Indian students benefitted from the services did not convert the assessee into an intermediary.
- Receipt of consideration from foreign universities in foreign exchange reinforced the export character of the supply.
On this basis, the High Court directed grant of GST refund on the export of services.
Supreme Court’s Ruling and Legal Reasoning
A Bench led by Justice JB Pardiwala dismissed the Revenue’s appeal and affirmed the High Court’s reasoning in full.
1. Principal-to-Principal Supply Is Determinative
The Supreme Court emphasised that the nature of contractual obligations governs classification under GST. Where the service provider supplies services directly to the foreign university and assumes independent responsibility, the service cannot be re-characterised as intermediary activity.
2. Beneficiary of Service Is Not Conclusive
The Court clarified that indirect benefit to Indian students is legally irrelevant. GST law focuses on who supplies services to whom, not on who ultimately benefits from the transaction.
3. Intermediary Definition Cannot Be Expanded Artificially
The Court cautioned against an over-expansive reading of Section 2(13). Treating all facilitatory or support services as intermediary services would defeat the export framework under GST and undermine India’s service-export competitiveness.
4. Legislative Shift on Intermediary Place of Supply
The judgment also noted that subsequent legislative developments, particularly the move to omit the special place-of-supply rule for intermediary services, reflect a clear intent to remove ambiguity and align GST with destination-based taxation principles.
Implications for GST Refund Jurisprudence
For Education Consultants
- Strong judicial backing for claiming export of services status.
- Refund denial merely on “intermediary” allegations is now unsustainable where principal-to-principal arrangements exist.
For Other Service Exporters
- The ruling has persuasive value for marketing agents, recruitment consultants, and overseas business facilitators.
- Substance of the contractual relationship will prevail over labels used by tax authorities.
For Tax Administration
- Mechanical classification of services as intermediary is likely to fail judicial scrutiny.
- Refund adjudication must engage with contractual terms, scope of services, and risk allocation.
Conclusion
The Supreme Court has decisively restored certainty, neutrality, and export-orientation to GST treatment of cross-border educational consultancy services. By rejecting a form-over-substance approach to intermediary classification, the ruling reinforces the foundational GST principle that exports should remain tax-free.
For an industry long burdened by refund litigation and inconsistent departmental interpretations, this judgment represents a structural correction rather than a case-specific relief.
Source: ET