By CA Surekha Ahuja
The intermediary controversy ends — the statute finally speaks clearly
[2026] 182 taxmann.com 881 (SC)
By affirming the Delhi High Court’s judgment, the Supreme Court has put to rest a recurring and misapplied departmental theory that sought to reclassify such services as “intermediary” supplies. The law now stands settled:
Education counselling services rendered to foreign universities on a principal-to-principal basis constitute export of services under the IGST Act and are eligible for zero-rating and refund with statutory interest.
This ruling restores certainty to GST export jurisprudence and realigns administrative practice with the statute as enacted.
The dispute — and why it persisted
The assessee, an education consultancy, provided counselling and admission-related services under direct contractual arrangements with foreign universities. The essential facts were undisputed:
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Contracts existed with foreign educational institutions
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Invoices were raised on overseas universities
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Consideration was received in convertible foreign exchange
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No fee was charged to students
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GST was paid and refund claimed treating the supply as export
The refund was denied solely on the assertion that the assessee acted as an “intermediary”, on the premise that Indian students were involved in the process.
This approach consistently ignored the statutory scheme — an error now conclusively corrected.
Statutory interpretation — applied as Parliament intended
1. Recipient of service: contract and consideration prevail
Under Section 2(93) of the CGST Act, the recipient of a service is the person liable to pay consideration. In the present case, contractual privity and payment obligation rested entirely with the foreign university.
The student, though a beneficiary of the service outcome, was not the recipient in law.
Settled principle: GST recognises legal supply, not economic benefit.
2. Intermediary definition under Section 2(13), IGST Act — strictly construed
An intermediary must:
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Arrange or facilitate a supply
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Between two or more other persons
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Without supplying such service on its own account
The courts correctly held that:
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The assessee supplied services on its own account
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There was no facilitation of a third-party supply
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No supply existed between students and universities arranged by the assessee
Where a service provider supplies services independently to a foreign principal and receives consideration directly, the intermediary definition is statutorily excluded.
Mislabeling such services as intermediary is not interpretation — it is contradiction of the Act.
3. Place of supply governed by Section 13(2), IGST Act
Section 13(2) provides the default rule: the place of supply is the location of the recipient.
Since the recipient was located outside India, the place of supply was outside India.
Repeated attempts to substitute this rule with:
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place of performance, or
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location of students
were rightly rejected as legally untenable.
4. Export of services — Section 2(6), IGST Act fully satisfied
All five statutory conditions were met:
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Supplier located in India
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Recipient located outside India
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Place of supply outside India
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Consideration received in foreign exchange
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Supplier and recipient not merely establishments of the same person
The supply therefore qualified as export of services and was zero-rated under Section 16.
5. Refund with interest — a statutory consequence
Once zero-rating is established:
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Refund under Section 54 of the CGST Act is a statutory entitlement
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Interest under Section 56 follows as a matter of law, not discretion
The Supreme Court’s direction to release the refund within a specified period reinforces that delay in refund of export taxes is legally impermissible.
The law as now settled
Counselling, promotion, and liaison services provided to foreign educational institutions on a principal-to-principal basis, with direct invoicing and foreign exchange consideration, are exports of services under GST and cannot be classified as intermediary services.
This position now carries:
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High Court reasoning
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Supreme Court finality
There is no remaining scope for administrative deviation.
A necessary boundary: export protection depends on clean supply segregation
While the law is settled, its benefit applies only where the structure respects GST boundaries.
Key cautions for practitioners and taxpayers:
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Do not mix supplies to foreign institutions and students
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Services rendered directly to students must be:
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Contractually separate
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Separately invoiced
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Treated as domestic taxable supplies
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Contract language must reflect independence, not agency
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Consideration must flow from the foreign recipient, without linkage to student fees
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One invoice should represent one clearly identifiable supply
Courts protect exports — not hybrid or blurred arrangements.
Position before and after the Supreme Court
| Aspect | Earlier Department View | Law as Settled |
|---|---|---|
| Nature of service | Intermediary | Export of service |
| Recipient | Student | Foreign university |
| Place of supply | India | Outside India |
| Zero-rating | Denied | Mandatory |
| Refund | Discretionary | Statutory |
| Interest | Disputed | Automatic |
Concluding note
The Supreme Court’s dismissal of the SLP in Global Opportunities restores coherence to GST export jurisprudence. It prevents denial of export benefits through artificial classification and reaffirms that GST must operate within the boundaries drawn by Parliament.
Exports are determined by statute, not perception.
Where supply, consideration, and recipient align with the law, zero-rating must follow.
For education consultancies structured correctly, the intermediary debate now stands conclusively closed.
