Educational Consultancy Services Not Considered Intermediary Services: Delhi HC Upholds GST Refund Orders to Global Opportunities Private Limited [Read Order]

In a recent ruling, the Delhi High Court upheld Goods and Service Tax (GST) refund orders to Global Opportunities Private Limited, holding that educational consultancy services provided to foreign universities do not qualify as "intermediary services" and are thus eligible for export benefits.

The Commissioner of Delhi Goods and Service Tax (Petitioner) challenged the orders passed by the Appellate Authority granting tax refund to the Respondent, Global Opportunities Private Limited, for the period between Financial Years 2018-19 to 2021-2022. The dispute centered on whether the educational consultancy services provided by the respondent to foreign universities qualify as 'intermediary services' or as 'export of services'.

The Department contended that the respondent was an 'intermediary' or agent of the foreign universities, as it facilitated student admissions in exchange for a commission. It argued that the agreements between the parties referred to the respondent as an "agent" and that for a service to be an export, the relationship must be principal-to-principal, not principal-to-agent.

The respondent, on the other hand, argued that the issue was settled law, relying on a series of judgments, including Ernst & Young Ltd v. Add. Commr. CGST Appeals-II, Delhi, K.C. Overseas Education Pvt. Ltd. v. Union of India, and orders of the CESTAT in M/s Krishna Consultancy. The Supreme Court had dismissed the Special Leave Petition against the Bombay High Court's decision in K.C. Overseas Education, which dealt with identical facts.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain, after analyzing the definitions and precedents, held that the respondent was not an intermediary. The Court relied on its own precedent in Ernst & Young Ltd., which was followed by the Bombay High Court in K.C. Overseas Education Pvt. Ltd.

The bench observed that “‘intermediary services’ are no longer services for which the place of location of the supplier would be deemed as the place of supply. Even for such services the place of the recipient of the services would be place of supply as per Section 13(2) of the IGST Act. The confusion that was prevalent relating to intermediaries and their entitlement to claim benefits on the basis of export of services is eliminated. “

The Court reiterated that an 'intermediary' is one who merely 'arranges or facilitates' a supply, whereas the respondent was directly supplying marketing and consultancy services to the foreign universities, who were the recipients and payors of the commission. It distinguished between the 'users' of the service (Indian students) and the 'recipient' (the foreign university). The Court also noted a recent recommendation by the GST Council to amend the law, which would further support treating such services as exports.

Accordingly, the Delhi High Court dismissed the petition filed by the Department and upheld the Appellate Authority's orders granting the refund. It directed the refund to be processed and granted to the respondent along with applicable statutory interest within two months.

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