KC Overseas Education Pvt. Ltd. Vs Union of India and Ors
Date: March 2, 2025
Subject Matter
Export of Support Services to Foreign Universities Not "Intermediary" Services. Refund Allowed.
Summary
Key Legal Issues & Findings
1. Definition of "Export of Services" and "Recipient"
The Revenue argued that the petitioner failed to satisfy Section 2(6) of the IGST Act, specifically regarding the "place of supply." The Court rejected this piecemeal interpretation, holding that:
Liability to Pay: Under Section 2(93) of the CGST Act, the "recipient" of a service is the person liable to pay the consideration. In this case, the foreign universities were liable to pay and did pay the consideration.
Place of Supply: Following Section 13(2) of the IGST Act, the place of supply for such services is the location of the recipient (outside India).
2. The "Intermediary" Dispute (Section 2(13))
The core of the dispute was whether the petitioner acted as an "intermediary" between the foreign universities and students in India.
Binding Precedent: The Court relied on the Delhi High Court's ruling in Ernst & Young Ltd vs. Addl. Comm. CGST, which clarified that providing support services to a foreign parent or principal entity does not automatically make the supplier an "intermediary."
Identity of the Service: The Court noted that the petitioner was providing services to the universities (e.g., recruitment support, market research), for which the universities paid. They were not providing a service to the students in India.
Consistent Jurisprudence: The Court observed that the definition of "intermediary" under the GST regime is identical to the previous Service Tax regime. It cited the Service Tax Appellate Tribunal (CESTAT) order in the petitioner’s own case, which previously held that the petitioner was a service provider to foreign entities, not an agent for students.
Ruling and Directions
Order Set Aside: The impugned appellate decision dated March 7, 2024, is quashed and set aside.
Refund Entitlement: The petitioner is held to be an exporter of services and is entitled to a refund of the GST paid to the department, subject to the verification that the consideration was received in convertible foreign currency as per Section 2(6)(iv).
No Costs: Considering the nature of the legal interpretation involved, the Court ordered no costs.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Both these petitions raises common issue and therefore, are decided by common judgment.
2. Only contention raised by Mr. Bhattad, the learned Counsel for respondents, is that sub-clause 3 of sec 2(6) of the IGST Act is not complied with. Section 2(6) of the IGST Act defines the expression “export of services”, one of the ingredients of which is “when the place of supply of service is outside India”. We however find that the entire definition, has to be read as a whole and not in a piecemeal manner and will have to be read in the background of what the statute defines a ‘recipient’ to mean as indicated in section 2(6)(ii), as defined in Section 2(93) of the GST Act in conjunction with Sec.13(2). All these provisions, in light of the definition of ‘intermediary’ as defined in Section 2(13) of the IOGST Act has been considered by the learned Division Bench of the Delhi High Court in Ernst & Young Ltd Vs. Add. Com. CGST 12023 (73) GSTL 161 (Del.), which also considers, the circular dtd 20.9.2021 bearing No. 159/15/21-GST issued by the Central Board of Indirect Taxes and Customs.
3. We have perused the reasons and conclusion in Ernst & Young Ltd Add. Com. CGST and upon hearing the contention of Mr. Bhattad, learned Counsel for respondent Nos. 3 and 4, do not see any ground made out for us to take a different view.
4. It is also necessary to note, that the function, which the petitioner is performing under the agreement with the foreign university is also considered by the Service Tax Appellate Tribunal in Service Tax Appeal No. 85867/16 in the order dtd 11.10.2023, in the case of the petitioner itself, which has held that the appellant is providing service to universities located in foreign countries who are paying consideration to the appellant on account of which in view of the definition of service it has been held that the appellant was not providing service to the students in India by recommending their names to the foreign university for being enrolled as students. It is not disputed by learned counsel Mr. Bhattad that the definition of ‘intermediary’ in service tax regime as well as the GST regime are identical.
5. We have also perused the impugned decision dtd 7.3.2024 by the Addl. Commissioner Appeals and the discussion and findings as recorded therein. We however in view of what has been held in Ernst & Young Ltd Add. Com. CGST (supra) which considers a similar position and similar provisions, are unable to agree with the reasons stated therein. We are unable to hold, that considering the definition of ‘recipient’ as contained in sec 2(93) of the GST Act, which holds an entity to be a recipient in case their consideration is payable supply of services, is the person who is liable to pay that consideration and the language of Sec 13(2) r/w sec 2(6) of IGST in light of the definition of intermediary as contained in sec 2(13) as indicated above, that the petitioner would not fall within that definition and therefore, would be entitled to a refund of the GST paid by the petitioner to the department subject to receipt of the consideration in foreign currency. We therefore, quash and set aside the impugned decision dated 7.3.2024 and allow the petitions in the above terms. Considering the circumstances, there shall be no costs.