Summary:

The Rajasthan High Court has held that services rendered by IDP Education India Pvt. Ltd. (‘the Petitioner’) to its parent company, IDP Australia, cannot be regarded as an “intermediary” and qualifies as “export of services”. The Court observed that the arrangement between the Petitioner and IDP Australia was a bi-partite, principal-to-principal contract and not of facilitation between three parties. Accordingly, the matter was remanded to the Adjudicating Authority for processing the refund claim with applicable interest.

Facts:

• The Petitioner is a subsidiary of IDP Australia and IDP Australia had agreements with various foreign universities to provide recruitment and admission-related services
• IDP Australia entered into a separate service agreement with the Petitioner to provide services related to student’s placement, guidance and enrolment etc. As per the agreement, IDP Australia remains the ultimate authority for finalizing of the admission process. A certain percentage of the application processing fee received by IDP Australia is paid to the Petitioner as consideration for the services
• The Petitioner considered its services to IDP Australia as “export of services” and filed refund claim of IGST paid
• The Adjudication Authority as well as the Appellate Authority rejected the refund claim holding the Petitioner to be an “intermediary” and consequently denied exports (including refunds)
• Due to absence of the GST Tribunal, the Petitioner filed a writ petition challenging the orders

Issue before the High Court:

• Whether the services supplied by the Petitioner to IDP Australia qualifies as an “intermediary service” or as “export of service” under the IGST Act?

Discussion and Ruling:

The Hon’ble Rajasthan High Court set aside the orders basis the following grounds:

• For a person to be termed as an “intermediary” under the IGST Act, there must be three parties to the transaction. In the present case, the services were rendered only to IDP Australia under a bi-partite arrangement and hence the requirement of three parties was absent
• The services were provided on principal-to-principal basis and the Petitioner had no role in the final admission process, nor did it have any contract with the foreign universities or the students
• The arrangement was in the nature of sub-contracting of services in which IDP Australia was obliged to provide services to foreign universities
• Based on the CESTAT’s order and the Bombay High Court’s ruling in the Petitioner’s own case, it is clear that the services are provided directly to IDP Australia under a specific contract or agreement
• When the Petitioner has been considered as an exporter in other State jurisdictions, there is no reason for respondents to take a different view
• Accordingly, the orders were quashed and the matter was remanded to the Adjudicating Authority to process the refund claim along with interest

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