The Bombay High Court has clarified a critical ambiguity in the application of the Integrated Goods and Services Tax Act, 2017, by holding that educational institutions providing services to foreign universities do not qualify as intermediaries and are therefore eligible for GST refunds. This ruling resolves a recurring dispute affecting cross-border education providers and reinforces the statutory boundaries of the term 'intermediary' under the GST regime.
Background & Facts
The Dispute
KC Overseas Education Pvt. Ltd., an Indian educational consultancy, facilitates student placements and academic collaborations between Indian students and foreign universities. The company charges fees for these services and pays integrated goods and services tax (IGST) on such transactions. The tax authorities denied refund claims on the ground that the services rendered constituted "intermediary services" under Section 2(13) of the IGST Act, 2017, which are excluded from the definition of "export of services" under Section 2(6).
Procedural History
- 2024: Petitioner filed refund applications under GST A.No.NGP/339-342/2024-25
- July 2025: Appellate Authority rejected refund claims, classifying services as intermediary
- August 2025: Supreme Court dismissed the Union of India’s SLPs challenging the Bombay High Court’s earlier judgment in Writ Petition No. 3914/2024
- February 2026: Present writ petitions filed seeking enforcement of the settled legal position
Relief Sought
The petitioner sought quashing of the appellate orders denying GST refunds and a direction to the authorities to process refunds in accordance with the Supreme Court’s ruling, which had already affirmed that the petitioner’s services do not fall within the definition of "intermediary".
The Legal Issue
The central question was whether Section 2(13) of the IGST Act, 2017, which defines an "intermediary" as a broker, agent, or any person arranging supply between two parties, applies to an educational institution that directly facilitates academic placements between students and foreign universities without acting as a middleman in a commercial transaction.
Arguments Presented
For the Petitioner
The petitioner relied on the Supreme Court’s decision in The Union of India & Ors. v. KC Overseas Education Pvt. Ltd., which held that the petitioner’s role was not that of an intermediary under Section 2(13) because it did not arrange supply between two parties in a commercial sense. The petitioner argued that it provided direct educational facilitation services, and the consideration flowed directly from foreign universities, satisfying the conditions for export of services under Section 2(6). The petitioner further cited M/s. Vodafone Idea Ltd. v. Union of India to emphasize that statutory definitions must be interpreted purposively, not expansively.
For the Respondent
The tax authorities contended that any entity connecting Indian students with foreign institutions must be classified as an intermediary under the broad language of Section 2(13), regardless of the nature of services rendered. They argued that the petitioner acted as a conduit and therefore fell within the literal scope of the definition, and that the Supreme Court’s dismissal of the SLP did not constitute a binding precedent on the Appellate Authority.
The Court's Analysis
The Court observed that the Supreme Court had already settled the legal position in The Union of India & Ors. v. KC Overseas Education Pvt. Ltd., holding that the petitioner’s services did not meet the essential characteristics of an intermediary. The Court emphasized that the term "intermediary" under Section 2(13) requires a tripartite relationship where the person facilitates supply between two distinct parties, and the petitioner’s role was direct and not transactional in nature.
"The petitioner does not arrange the supply of services between the foreign university and the student as an agent or broker; it provides educational advisory services directly to the student, with the foreign university being the beneficiary of the placement, not the counterparty in a commercial supply chain."
The Court further noted that the Appellate Authority had failed to apply the binding precedent, thereby committing a jurisdictional error. The Court held that the Appellate Authority was bound by the Supreme Court’s ruling and could not re-litigate an issue already conclusively decided. The Court rejected the respondent’s argument that dismissal of an SLP is not a precedent, citing State of Maharashtra v. M/s. S. R. Bhat & Co. to affirm that when a higher court examines and affirms a lower court’s reasoning, the legal principle becomes authoritative.
The Verdict
The petitioner succeeded. The Court quashed the impugned orders denying GST refunds and remanded the matters to the Appellate Authority to reconsider the refund claims in light of the Supreme Court’s ruling. The Court held that services rendered by educational providers to foreign universities, where consideration is received in foreign currency, constitute export of services under Section 2(6) of the IGST Act, 2017, and are not excluded as intermediary services under Section 2(13).
What This Means For Similar Cases
Educational Services Are Not Automatically Intermediary
- Practitioners must now argue that educational placement services, counseling, and academic coordination do not constitute "arranging supply" under Section 2(13)
- The focus must be on whether the service provider acts as a principal or agent in the transaction
- Documentation showing direct contractual relationships with students and foreign institutions strengthens the claim
Refund Claims Must Be Reassessed in Light of Binding Precedent
- Appellate authorities cannot ignore Supreme Court rulings on statutory interpretation
- Tax officers must review pending refund claims of education providers under the same legal framework
- Any denial of refund on intermediary grounds post this judgment is legally untenable
Export of Services Requires Only Foreign Currency Receipt
- Once the service is determined to be non-intermediary, the only condition for export is receipt of payment in foreign exchange
- This aligns with the broader policy objective of promoting India’s education export sector
- Practitioners should ensure foreign currency receipts are properly documented and mapped to specific service invoices
