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Can an Indian consultancy providing counselling and recruitment support services to foreign universities lose its status as a service exporter merely because it receives commission-based remuneration linked to student admissions? This important question formed the centre of the Delhi High Court’s ruling in Fateh Education Consulting Private Limited v. Assistant Commissioner, CGST Division, Wazirpur1. The dispute concerns the recurring issue of classification of cross-border consultancy services as ‘intermediary services’ under Section 2(13) of the Integrated Goods and Services Tax Act, 2017, thereby denying exporters the benefits available to zero-rated supplies under Section 16 of the Integrated Goods and Services Tax Act, 2017. “The case raised the issue whether such services qualified as ‘export of services’ or fell within the ambit of ‘intermediary services’ under Section 2(13) of the IGST Act,” while also examining “whether receipt of consideration by way of commission, by itself, could render the petitioner an intermediary.”
The petitioner, Fateh Education Consulting Private Limited, had entered into agreements with foreign universities, including University of Manchester, for providing educational counselling, marketing, and recruitment support services in India. The petitioner raised invoices directly upon the foreign universities, received consideration exclusively in convertible foreign exchange, and did not charge any fee from Indian students. Based on these transactions, the petitioner filed a refund claim of approximately ₹2.63 crore under Section 54 of the Central Goods and Services Tax Act, 2017 on the ground that the services qualified as exports. However, the refund application was rejected by the department on the reasoning that the petitioner was functioning as an “intermediary” because it promoted university courses, identified prospective students, and received commission linked to tuition fees. According to the department, these activities transformed the petitioner into an agent facilitating supplies between foreign universities and Indian students, thereby making the transaction taxable within India.
The petitioner challenged this interpretation by arguing that the structure of remuneration cannot determine the true nature of a transaction. It contended that the services were independently rendered to foreign universities under principal-to-principal contracts and that the universities alone remained liable to pay consideration. The petitioner further emphasised that it possessed no authority to bind the universities, guarantee admissions, or enter into contracts on their behalf. Consequently, the consultancy maintained that the transaction fully satisfied the statutory ingredients of “export of services” and could not be recharacterised merely because students incidentally benefitted from the counselling process.
The division bench comprising Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul rejected the department’s approach and held that the issue was no longer res integra. Relying upon earlier decisions including Commissioner of Delhi GST v. Global Opportunities Private Limited2 and K.C. Overseas Education Pvt. Ltd. v. Union of India3, the Court reiterated that educational consultancy, marketing, and recruitment support services rendered by Indian entities to foreign universities qualify as export of services where the foreign universities are the contractual recipients of the services and remain liable to pay consideration. The Court observed that the determinative factors are the contractual recipient of the service, the person liable to pay consideration, and the nature of the services supplied. Since the petitioner raised invoices upon foreign universities, received consideration exclusively from them in foreign exchange, and did not charge Indian students, the universities remained the actual recipients of the services, while any assistance rendered to students was merely incidental.
The Court further clarified that a person supplying services on its “own account” cannot be treated as an intermediary merely because such services facilitate or further the business objectives of a foreign recipient. In the present case, the petitioner independently carried out its consultancy, marketing, and recruitment support activities without possessing authority to bind the foreign universities, guarantee admissions, or enter into contracts on their behalf. The agreements themselves expressly excluded any principal-agent relationship. Consequently, the Court held that the petitioner could not be artificially classified as an intermediary under Section 2(13) of the IGST Act merely because it received commission-based consideration linked to student admissions. The judgment also referred to decisions such as Ernst & Young Ltd. v. Additional Commissioner CGST Appeals-II4, Commissioner of Service Tax-III, Mumbai v. Vodafone India Ltd.5, and Commissioner, Central Excise, CGST-Delhi South Commissionerate v. Blackberry India Pvt. Ltd.6 to establish that independent service providers rendering services on their own account remain entitled to export benefits under the GST framework.
ConclusionBy setting aside the refund rejection order and directing the department to release the refund along with statutory interest under Section 56 of the Central Goods and Services Tax Act, 2017 within two months, the Delhi High Court delivered a significant affirmation of India’s export-oriented GST framework. The ruling strengthens commercial certainty for Indian consultancies operating within the global education sector and sends a strong institutional message that commission-based remuneration structures cannot, by themselves, determine tax liability in cross-border service transactions. More importantly, the judgment reinforces the principle that genuine exporters cannot be deprived of statutory fiscal benefits through expansive intermediary classifications unsupported by the contractual realities of the transaction.
Citations
Expositor(s): Adv. Aparna Shukla
