The Hon’ble Supreme Court in the case of The Union of India & Ors V. KC Overseas Education Pvt Ltd Nagpur [SLP (C) Nos. 21104-21105/2025, order dated August 25, 2025] dismissed the Revenue’s special leave petition, thereby affirming the Bombay High Court’s findings and upholding the IGST refund entitlement. The Court held that services provided by Indian education consultants to foreign universities for facilitating student admissions, where the contractual relationship and consideration are directly between the Indian entity and the foreign university, do not qualify as “intermediary services” but instead constitute “export of services” under the IGST Act. Accordingly, such transactions are eligible for IGST refund under Indian GST law.
Facts:
KC Overseas Education Pvt. Ltd. (“the Respondent”) is engaged in providing facilitation and recruitment services to foreign universities, receiving commission from those universities for securing admissions of Indian students.
Union of India & Ors. (“the Petitioner”) rejected the IGST refund claim, alleging they acted as an “intermediary” between students in India and foreign universities, thereby not fulfilling the “export of services” requirements under the IGST Act.
The Respondent contended that it provides services to the foreign universities on a principal-to-principal basis, is engaged contractually by foreign clients, and does not merely arrange/facilitate third-party transactions. Remuneration is paid in convertible foreign currency, and the services are for and on behalf of the overseas client.
The Petitioner contended that the Respondent, in effect, arranges services between foreign universities and Indian students, falling squarely under the “intermediary” classification, and hence its services do not qualify as “export of services.”
Aggrieved by the denial of IGST refund and its classification as an intermediary, the Respondent filed a writ petition before the Bombay High Court. After succeeding, the Revenue filed SLPs before the Supreme Court challenging the High Court’s order.
Issue:
Whether the services provided by KC Overseas Education Pvt. Ltd. to foreign universities for facilitating overseas student admissions constitute “export of services” under Section 2(6) of the IGST Act, or are to be classified as “intermediary services” under Section 2(13), thereby disentitling it from IGST refund?
Held:
The Hon’ble Bombay High Court held as under:
- Observed that, the statutory definition of “export of services” under Section 2(6) IGST Act must be interpreted as a whole and not in a piece-meal fashion, and reference must be made to the real contracting parties and the actual flow of consideration.
- Noted that, the Petitioner provides the main supply of service to foreign universities, not as an agent/arranger/facilitator for another underlying supply to Indian students, but on a principal-to-principal basis in accordance with contract; the recipient is the foreign university.
- Relying on tribunal and service tax regime precedents, concluded that the Respondent does not fit the “intermediary” definition, and the commissions received from foreign principals for recruitment/admissions support constituted export of services and set aside the appellate and departmental orders that denied IGST refund, and directed sanction of the refund to the Respondent.
The Hon’ble Supreme Court held as under:
- Noted that, the issue involved is covered by the Supreme Court’s earlier judgment in Commissioner of Service Tax III, Mumbai v. Vodafone India Ltd. [CA Nos. 10815-10819/2014, May 6,2025] and the dictum in Commissioner, Central Excise, CGST-Delhi South v. Blackberry India Pvt. Ltd. [SLP (C) No. 25992/2024, November 4, 2024], both of which held that comparable services provided to overseas clients are to be treated as ‘exports’ and not intermediary transactions.
- Held that, the Revenue’s SLP be dismissed, affirming the Bombay High Court’s grant of IGST refund and its interpretation of the law.
Our Comments:
The decision affirms the growing judicial consensus as in the Commissioner of Service Tax III, Mumbai v. Vodafone India Ltd. [CA Nos. 10815-10819/2014, May 6, 2025] and Commissioner, Central Excise, CGST-Delhi South v. Blackberry India Pvt. Ltd. [SLP (C) No. 25992/2024, November 4, 2024], that in the absence of an agency/facilitation element, contracts where the Indian service provider operates for and gets paid by the foreign client are not “intermediary” arrangements, even if the service ultimately benefits other parties in India. The test is based on substance over form: the recipient and payer of service, the contractual engagement, and commercial reality. The ruling provides much-needed certainty for the education consulting and broader export service sector, preventing unwarranted denial of zero-rating/refund on narrow technical grounds.
In the case of IDP Education India Pvt. Ltd. v. Union of India & Ors. [Writ Petition No. 5144 OF 2022, order dated June 25, 2024] The Bombay High Court granted refund to IDP Education India on services rendered to IDP Australia pertaining to assistance in university admissions, rejecting the Revenue’s classification of the petitioner as an “intermediary.” It emphasized the direct contractual relationship between the Indian entity and foreign universities, the receipt of payment in foreign exchange, and that the entity was not merely a facilitator. This reasoning is fully aligned with the reasoning in the KC Overseas Education case and underpins the principle that such facilitation services qualify as export of services.
Furthermore, the 56th GST Council meeting held on September 03, 2025, recommends the amendments in place of supply provisions for intermediary services under section 13(8) of the IGST Act.
The Council’s recommendation is for omission of clause (b) of section 13(8) of IGST Act 2017. Accordingly, after the said law amendment, the place of supply for “intermediary services” will be determined as per the default provision under section 13(2) of the IGST Act, 2017 i.e. the location of the recipient of such services. This will help Indian exporters of such services to claim export benefits.
Relevant Provisions:
Section 2(6), IGST Act, 2017:
“export of services” means the supply of any service when,-
(i) the supplier of service is located in India
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in Section 8”
Section 2(13) of the IGST Act, 2017:
“intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;”
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