2025 (5) TMI 729 - HC - GST

Exporters Qualify for IGST Refund as Direct Service Providers Under Principal-to-Principal Support Services Model

IDP Education India Pvt Ltd Versus Union of India & Ors.

IDP Education India Pvt Ltd Versus Union of India & Ors. - 2025:BHC - OS:7665 - DB 1. ISSUES PRESENTED and CONSIDEREDThe primary legal question considered by the Court was whether the Petitioners qualify as an 'intermediary' under Section 13(8) read with Section 2(13) of the Integrated Goods and Services Tax Act, 2017 ('IGST Act'). This determination was pivotal because it affected the entitlement of the Petitioners to claim refunds of Integrated GST (IGST) paid on services supplied to a foreign entity, IDP Australia, which were treated as exports of services under Section 2(6) of the IGST Act. The petitions challenged the rejection of refund claims for IGST paid during two distinct periods: March 2019 to April 2020 and April 2020 to March 2021.Additional related issues included:Whether the services rendered by the Petitioners to IDP Australia constituted principal-to-principal transactions or intermediary services.The applicability and interpretation of the CBIC Circular No. 159/15/2021-GST dated 20.09.2021, which clarified the scope of 'intermediary' under the GST regime vis-`a-vis the erstwhile Service Tax regime.The effect of prior adjudications, specifically a CESTAT order dated 28th October 2021, which had previously ruled on the same issue for an earlier period under similar facts.2. ISSUE-WISE DETAILED ANALYSISIssue: Whether the Petitioners qualify as 'intermediary' under the IGST Act.Relevant legal framework and precedents: The definition of 'intermediary' under Section 2(13) of the IGST Act is central to the analysis. The term is defined as a person who arranges or facilitates the supply of goods or services between two or more persons but does not include a person who supplies such goods or services on his own account. The CBIC Circular No. 159/15/2021-GST explicitly states that the concept of 'intermediary' under GST is broadly the same as under the Service Tax regime, thereby invoking precedents and interpretations from the earlier tax regime.The CESTAT's Final Order dated 28th October 2021, which considered the same factual matrix for the period April 2014 to September 2015, held that the Petitioner was not an intermediary. This order attained finality after the challenge before the Delhi High Court was dismissed for delay.Court's interpretation and reasoning: The Court examined the nature of the contractual relationship between the Petitioners and IDP Australia. The Petitioner was found to have no direct contractual obligation with either the foreign universities or the students. Instead, the Petitioner provided support services to IDP Australia under a Support Services Agreement, receiving a percentage of fees from IDP Australia. The Court noted that the Petitioner rendered services on a principal-to-principal basis under a bipartite contract.The Court also considered the CBIC Circular clarifying that the scope of 'intermediary' under GST remains consistent with the Service Tax regime, under which the CESTAT had ruled in favor of the Petitioner. The Court rejected the Respondents' attempt to distinguish the CESTAT order on the basis of a different agreement, observing that the differences were only due to periodic renewal of the agreement, with the scope of services remaining unchanged.Key evidence and findings: The contractual documents, the nature of services rendered, the absence of any direct contractual relationship with the universities or students, and the prior CESTAT order were critical pieces of evidence. The CBIC Circular provided authoritative guidance on the interpretation of 'intermediary.'Application of law to facts: Applying the legal definitions and precedents to the facts, the Court concluded that the Petitioners did not fall within the definition of 'intermediary.' The services rendered were not facilitative or arranging in nature but were principal-to-principal support services. Therefore, the Petitioners' claim for refund of IGST paid on export of services was valid.Treatment of competing arguments: The Respondents argued that the Petitioners were intermediaries based on findings in the impugned order. However, the Court found these arguments unpersuasive, given the binding nature of the CESTAT order and the CBIC Circular. The Respondents' attempt to differentiate the agreements was dismissed as a mere technicality without substantive impact on the nature of services.Conclusions: The Court held that the Petitioners are not intermediaries under the IGST Act and are entitled to the refund claimed. The matter was remanded to the adjudicating authority for processing the refund claim with applicable interest within four weeks.3. SIGNIFICANT HOLDINGSThe Court's crucial legal reasoning included the following verbatim observation:'Since the CESTAT order has now attained finality, we see no reason to take a different view in the present case. Also, we find force in the submissions of the counsel for the Petitioner that the issue is squarely covered by the CBIC Circular dated 20.09.2021, in as much as it is clarified that the provisions of law for intermediary under the service tax regime and the GST regime broadly remain the same. In view of the above, the Respondents cannot be now allowed to take a different view.' The core principles established are:The definition of 'intermediary' under the IGST Act is consistent with that under the Service Tax regime, as clarified by the CBIC Circular.A party providing support services on a principal-to-principal basis without direct contractual obligations with the ultimate service recipients does not qualify as an intermediary.Finality of prior adjudications (such as the CESTAT order) on identical facts is binding and precludes re-litigation on the same issue.Final determinations on the issue were:The Petitioners do not qualify as intermediaries under the IGST Act.The rejection of the Petitioners' refund claims on the basis that they were intermediaries was incorrect.The Petitioners are entitled to refunds of IGST paid on export of services, along with applicable interest.The matter was remanded to the adjudicating authority for expeditious processing of the refund claims.