CROSS-BORDER EDUCATIONAL CONSULTANCY UNDER GST - THE JOURNEY FROM INTERMEDIARY DISPUTES TO EXPORT RECOGNITION

A Refund Rejection That Reopened a Much Larger GST Debate

Sometimes, a refund dispute subtly opens the way to a broader constitutional and jurisprudential debate. What initially appears to be a simple GST refund dispute can gradually evolve into a deeper debate concerning the export of services, the place of supply, and intermediary taxation. This was the issue before the Delhi High Court in Fateh Education Consulting Private Limited Versus Assistant Commissioner, CGST Division, CGST Delhi West Commissionerate, Commissioner, Division Central Tax Delhi West Commissionerate. - 2026 (5) TMI 632 - DELHI HIGH COURT, where the Court had to re-consider the ongoing debate over overseas educational consultancy services under GST.

The main dispute arose from the rejection of a refund of Rs. 2,63,38,771 for the period from September 2023 to March 2024. However, behind this refund rejection lay a much deeper legal controversy - whether educational consultants assisting Indian students in securing admissions abroad are genuinely rendering export of services to foreign universities or merely acting as intermediaries between universities and students. The issue assumes considerable importance because if such activities are classified as 'intermediary services' under Section 2(13) of the IGST Act, the export status of the transaction gets denied, resulting in the levy of GST and consequential rejection of refund claims. For the period from 01.07.2017 to 29.03.2026, this consequence flowed from Section 13(8)(b) of the IGST Act, which treated the place of supply of intermediary services as the location of the supplier in India. However, from 30.03.2026, pursuant to amendments introduced by the Finance Act, 2026, Section 13(8)(b) stands omitted, and the place of supply of intermediary services would now be governed by the default statutory provision contained in Section 13(2).

The significance of the judgment, therefore, extends far beyond a single refund claim. It reflects the ongoing judicial effort to determine how India's GST framework should treat modern cross-border consultancy services, where contractual arrangements exist with foreign entities, foreign exchange is received from abroad, and incidental or consequential benefits may also arise in India. In many ways, the dispute represents the broader struggle between commercial reality and an overly expansive interpretation of intermediary services.

The Department's Understanding - 'You Are Facilitating Admissions'

The Department's stance before the Court was that the petitioner was not independently providing services to foreign universities. Instead, they were simply facilitating the admissions of Indian students to these institutions. The Revenue authorities argued that the petitioner was promoting courses from foreign universities, helping prospective students find suitable options, assisting with admissions, and earning commissions based on tuition fees paid by students. Based on these facts, the Department concluded that the petitioner was acting as an intermediary, arranging or facilitating transactions between two separate parties, and thus fell within the scope of the definition in Section 2(13) of the IGST Act, 2017.

This understanding within the department was not entirely new. Repeatedly, similar claims have appeared in disputes involving overseas educational consultants, both under the service tax and GST regimes. Revenue authorities have often sought to categorise these consultants as admission facilitators or referral agents rather than independent service providers. The Department's reasoning substantially proceeded on the basis that since students ultimately receive admissions and educational benefits, the consultant cannot be regarded as independently supplying services on its own account. The Department argues that the consultant serves only as a conduit between foreign universities and Indian students, functioning as an intermediary.

However, interpreting it this way often overlooks the actual contractual framework of the transaction. Modern commercial deals typically include multiple stakeholders, indirect beneficiaries, and complex economic impacts. Just because a student ultimately gains educational benefit does not necessarily identify the contractual recipient under GST law. This key distinction between a 'beneficiary' and a 'recipient' has increasingly played a central role in the court's discussions in this case.

The Larger Question - Who Is the Real Recipient of Service?

The Delhi High Court examined who truly received the service, rather than assuming that the individual who most benefited was the recipient under the GST law. The Court thoroughly analysed the true nature of the agreements, noting that the petitioner was directly hired by the foreign universities. The contracts made it clear that responsibilities were owed to the universities, with payments made from these foreign entities in foreign currency.

The ruling clarifies that in modern service transactions, indirect benefits can pass through multiple parties without changing the contractual recipient. For instance, a marketing consultant promoting a foreign company's products in India may indirectly benefit Indian consumers, but the service recipient is still the foreign company. Similarly, an educational consultant conducting outreach, counselling, and promotional activities for foreign universities may help students secure admissions, but this does not make the students the recipients of service under the GST law. The key factors remain the contractual agreement, the flow of consideration, and the nature of the obligations undertaken by the service provider.

This distinction between a contractual recipient and an incidental beneficiary has become a key principle in the law governing the export of services. The Delhi High Court rejected a superficial interpretation just because Indian students were part of the process. Instead, the Court highlighted that the petitioner was independently providing consultancy and promotional services to foreign educational institutions, rather than simply coordinating between two separate parties.

The Continuing Influence of the K.C. Overseas Education Judgment

A key aspect of the current judgment is its reliance on the Bombay High Court's decision in KC Overseas Education Pvt. Ltd. Vsersus The Union of India and Ors. - 2025 (3) TMI 1526 - BOMBAY HIGH COURT. That case addressed a nearly identical issue involving overseas education consultants hired by foreign universities for counselling and outreach in India. The Bombay High Court ultimately held that the consultants were providing services for export rather than acting as intermediaries.

The Bombay High Court noted that the educational consultants were offering consultancy and marketing services directly, rather than just coordinating between two independent entities. It was also observed that the consultants received payments directly from foreign universities in foreign currency and did not charge Indian students.

A particularly important aspect of the judgment was its emphasis on the exclusionary portion of Section 2(13), which excludes persons supplying services on their own account from the scope of 'intermediary services'. The decision underscores that overseas education consultants were independently rendering services on a principal-to-principal basis and could not be mechanically treated as mere facilitators between two parties.

When the Supreme Court Declined to Interfere with the K.C. Overseas Education Ruling

The legal importance of the dispute grew significantly after the Supreme Court dismissed the Special Leave Petition challenging the Bombay High Court's ruling in Commissioner Of Service Tax-III, Mumbai Versus M/s. Vodafone India Limited - 2025 (8) TMI 938 - Supreme Court. Although dismissing a Special Leave Petition (SLP) does not automatically establish a legal precedent under Article 141 of the Constitution, this decision nonetheless holds notable persuasive value, especially because the Supreme Court examined key earlier precedents before choosing not to overturn the Bombay High Court's reasoning.

While dismissing the Special Leave Petition filed against the Bombay High Court judgment in K.C. Overseas Education Pvt. Ltd., the Supreme Court also took note of important earlier decisions, including Commissioner Of Service Tax-III, Mumbai Versus M/s. Vodafone India Limited - 2025 (8) TMI 938 - Supreme Court and COMMISSIONER, CENTRAL EXCISE, CGST-DELHI SOUTH COMMISSIONERATE & ANR. Versus BLACKBERRY INDIA PVT. LTD. - 2024 (11) TMI 830 - SC Order. The reference to these judgments is of considerable significance because both decisions emphasise that the export of services must be examined from the perspective of the real contractual recipient and the true commercial substance of the transaction, rather than merely on the basis of incidental local involvement. The broader effect of this judicial approach is that courts are increasingly reluctant to mechanically expand the scope of 'intermediary services' merely because some part of the activity or certain downstream consequences may arise within India.

The dismissal of the SLP, therefore, added further persuasive weight to the evolving judicial approach towards export-oriented consultancy services.

Vodafone Judgment - The Philosophy of Export of Services

The Supreme Court's decision in Commissioner Of Service Tax-III, Mumbai Versus M/s. Vodafone India Limited - 2025 (8) TMI 938 - Supreme Courtis a key precedent affecting the current debate, as it re-examined the core principles behind export taxation. Though originally issued in the context of service tax law, its conceptual insights have increasingly shaped GST case law. The judgment recognises that service tax is fundamentally a destination-based consumption tax, meaning the key consideration should be the location of the contractual recipient, rather than where incidental activities occur or where downstream effects take place.

The Supreme Court highlighted that the key factor in establishing export status is the nature of the relationship between the service provider and the contract recipient. Merely performing activities in India, or having Indian end-users who benefit indirectly, does not negate the export nature of the transaction. This logic is particularly relevant today, as technology services, marketing support, consulting, and digital interactions often cross borders and impact multiple legal jurisdictions.

The judgment significantly diminishes the Department's inclination to adopt the 'ultimate beneficiary' test within intermediary jurisprudence. If all services that provide some local benefit were excluded from export status, a large part of India's cross-border service industry would be subject to domestic taxes. The Delhi High Court's use of this broader approach shows that GST interpretation should align with real-world commercial practices and international business frameworks, rather than limited territorial assumptions.

Why the 'Intermediary' Debate Became So Controversial

The controversy surrounding intermediary services has emerged as one of the most heavily litigated issues under GST due to the far-reaching consequences of such classification. Once a transaction is treated as an intermediary service, Section 13(8)(b) of the IGST Act, as it existed from 01.07.2017 to 29.03.2026, deemed the place of supply to be the location of the supplier in India. The immediate consequence was that even genuine cross-border services receiving consideration in convertible foreign exchange could lose their status as 'export of services.' This often resulted in the denial of refunds, the levy of GST, the issuance of tax demands, and prolonged litigation for businesses that otherwise considered themselves part of India's export economy. The seriousness of the issue may explain why intermediary jurisprudence has become one of the most debated areas under GST law.

Over time, Revenue authorities frequently adopted a broad interpretation of intermediary services, treating several support functions, promotional activities, liaison arrangements, consultancy operations, and coordination services as mere facilitation between two parties. Such interpretation created uncertainty across numerous sectors, including overseas education consultancy, outsourcing support, sourcing operations, technology assistance, travel support and global marketing services. Businesses repeatedly argued that this excessively wide interpretation diluted the destination-based philosophy underlying GST and adversely affected India's position as an international service hub. Perhaps taking note of this prolonged controversy and the evolving judicial approach reflected in decisions such as  The Union of India & Ors. Versus Kc Overseas Education Pvt Ltd Nagpur. - 2025 (9) TMI 469 - SC Order, the Legislature has now omitted Section 13(8)(b) through the Finance Act, 2026. Consequently, intermediary services would now fall under the default statutory place of supply provision contained in Section 13(2).'Faced with these recurring disputes, courts gradually began insisting on a closer examination of the contractual structure, commercial substance, flow of consideration, and the precise role played by the service provider. Judicial focus increasingly shifted towards determining whether the person was independently supplying services on a principal-to-principal basis or merely arranging supplies between other parties. The present judgment forms part of this broader judicial movement, which seeks to prevent mechanical or over-expansive application of intermediary provisions merely because some local element or incidental benefit exists within India.

A Significant Relief for the Education Consultancy Sector

The judgment provides substantial relief to the overseas education consultancy sector, which has faced persistent refund rejections and intermediary-related disputes despite operating under agreements with foreign universities and receiving consideration in foreign exchange. Viewed in conjunction with Global Opportunities, K.C. Overseas Education, Vodafone India Ltd., and related precedents, the present ruling considerably strengthens the judicial recognition of such services as exports of services rather than as intermediary supplies.

At the same time, the judgment also highlights the continuing importance of carefully structured agreements and proper documentation. Courts have consistently emphasised that contractual terms, the flow of consideration, the invoicing pattern, and the precise nature of the obligations remain crucial factors in determining whether a consultant is independently providing services on a principal-to-principal basis or merely facilitating supplies between other parties.

Yet the Litigation May Not End Completely

Despite the growing line of favourable decisions, intermediary disputes may still continue because the determination of taxability ultimately depends on the precise contractual structure, the scope of obligations, and the actual commercial relationship between the parties. Courts have repeatedly emphasised that carefully drafted agreements, clear principal-to-principal arrangements and proper documentation remain crucial in deciding whether a person is independently supplying services or merely facilitating supplies between others.

A Significant Step in the Export of Services Jurisprudence

The ruling in Fateh Education Consulting Private Ltd. further strengthens the judicial view that educational consultancy services rendered to foreign universities on a principal-to-principal basis cannot automatically be treated as intermediary services merely because Indian students ultimately obtain admissions abroad. Relying on earlier decisions, including Global Opportunities, K.C. Overseas Education and Vodafone India Ltd., the Delhi High Court reaffirmed that contractual substance, identity of the recipient, and the true commercial nature of the transaction remain decisive factors in determining the export of services under GST. The judgment is therefore likely to provide substantial relief in intermediary-related disputes, particularly for cross-border consultancy and support service sectors pertaining to the period from 01.07.2017 to 29.03.2026, when Section 13(8)(b) of the IGST Act remained in force prior to its omission with effect from 30.03.2026.

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CA. Raj Jaggi and Adv. Kirti Jaggi, Assistant Professor, Asian Law College, Noida