Janaki S. Nair

Advocate, Bombay High Court

The dispute turns on the difference between who is treated as the recipient of the service and who ultimately benefits from it.

Background and departmental objections

Education consultants and overseas admission facilitators typically operate from India under contracts with foreign universities. Their role commonly includes counselling, screening of applications, documentation support, coordination with universities, and related services. The contractual engagement is with the foreign university. Consideration is paid by the university, usually in foreign currency. Students in India do not contract with the consultant and do not pay for these services.

Despite this structure, export status has historically been denied in a large number of cases. The department has proceeded on the basis that students are the real recipients of the service, or that the service is effectively used in India. On that footing, refund claims of unutilized input tax credit were rejected, either by denying export of services under Section 2(6) of the IGST Act or by treating the consultant as an intermediary under Section 13(8)(b).¹

Although the articulation varied across notices and orders, the objections rested on a common premise: that the person who benefits from the service can be treated as the recipient, and that refund under Section 54 is not automatic even where consideration is received from abroad.

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Judicial position: High Courts and the Supreme Court

For a long period, disputes involving education consultancy services were addressed almost entirely at the High Court level. Among those decisions, the Calcutta High Court’s ruling in Global Reach Education Services Pvt. Ltd. v. Union of India,² came to be relied upon most often. The Court looked first at how the arrangement was structured. The consultant was engaged by foreign universities. Payment came from those universities. Students in India neither entered into the contract nor paid for the service. That factual setting weighed heavily with the Court. The foreign university was treated as the recipient. The fact that students benefitted from the process did not, by itself, change that position. On the same facts, the allegation that the consultant acted as an intermediary was not accepted.

The Revenue carried the matter further. The special leave petition was dismissed without reasons. The dismissal did not examine the reasoning of the High Court and did not place the decision on the footing of Supreme Court precedent. For some time thereafter, the position continued to be shaped by High Court rulings, without any direct pronouncement from the Supreme Court on export of services or refund of input tax credit in this setting.

The Supreme Court subsequently examined the same issue in Union of India v KC Overseas Education Pvt Ltd,³ in the context of refund claims arising from education consultancy services rendered to foreign universities. The court examined refund claims arising from education consultancy services supplied to foreign universities. The Court’s focus remained on the contract and on the flow of consideration. Where the arrangement was on a principal-to-principal basis, the services were treated as exports and held eligible for refund. The fact that students in India benefitted from the process did not, by itself, recast them as recipients. The intermediary provision was also not applied where the consultant was not acting as a facilitator on behalf of another.

This was the first time the Supreme Court dealt with the education consultancy model in the context of export of services and refund entitlement. Earlier Supreme Court decisions in other GST matters continue to be referred to, though they arose in different factual settings. In Northern Operating Systems Pvt. Ltd.,⁴ the Court did not move beyond the definition of “recipient” in Section 2(93) of the CGST Act. The enquiry stayed with who was required to pay for the service. Broader arguments about benefit or end use did not alter that approach.

A similar restraint is visible in Mohit Minerals.⁵ The Court declined to expand the concept of “recipient” through notifications or economic logic. The distinction between the person to whom the service is supplied and the person who may ultimately benefit from it was kept intact. Those decisions were not concerned with education consultancy. Their significance lies elsewhere. They reflect a consistent insistence on reading the statute as it stands. That insistence has now been applied by the Supreme Court in the education consultancy context as well.

Export of Services: Statutory Position

Section 2(6) of the IGST Act lays down when a service can be treated as an export. The focus is on where the supplier and recipient are located, how the place of supply is determined, and whether consideration is received in foreign exchange. Where the service is ultimately used, or who may benefit from it, does not form part of the enquiry under the provision.

The identification of the recipient is governed by Section 2(93) of the CGST Act. As a rule, the recipient is the person liable to pay consideration. Only in cases where no consideration is payable does the statute look to the person to whom the service is rendered. The provision does not permit substitution of the beneficiary for the recipient merely because the beneficiary is located in India.

Section 13 of the IGST Act adopts the location of the recipient as the general rule for determining place of supply where either the supplier or the recipient is outside India. Section 13(8)(b) is not meant to apply across all service arrangements. It is meant for cases where the supplier is acting as a go-between, rather than where the service is supplied under its own contract.

Refund of unutilized input tax credit is governed by Section 54 of the CGST Act. In the case of zero-rated supplies, the entitlement flows from the character of the supply and not from any assessment of where the service ultimately yields benefit. The statute does not contemplate denial of refund on the ground that the service has effects within India.

Taken together, the statutory scheme leaves limited room for importing concepts such as “use in India” or “place of consumption”. Disputes arise not from the text of the provisions, but from attempts to read into them considerations that the legislature has not incorporated. This statutory scheme is the basis on which the Supreme Court has now examined education consultancy services supplied to foreign universities.⁶

Intermediary classification and refund rejection

In refund proceedings involving education consultants, the intermediary tag has been raised with some regularity. In many cases, the reasoning does not go much beyond the presence of multiple parties. The involvement of a foreign university, an Indian consultant, and students in India is often treated as decisive. That line of reasoning has not found favour with courts.

Judicial scrutiny has generally begun elsewhere. Courts have looked at what the consultant is actually required to do under the contract. Whether the consultant is performing services on its own account, or merely arranging a supply between two others, has been central. The degree of discretion available in carrying out the work has also mattered. So has the nature of the consideration what it is paid for, and by whom. Where the consultant operates on a principal-to- principal basis with a foreign university and undertakes defined responsibilities, intermediary character has not been assumed as a given.⁷

The recent decision of the Supreme Court has reinforced this approach. The Court did not accept the proposition that the consultant becomes an intermediary merely because students in India benefit from the process. Nor was the intermediary provision applied in the absence of facilitation on behalf of another party. The analysis remained tied to the contractual role performed by the consultant.

Acceptance of export status, however, has not always brought refund proceedings to a close. Claims continue to be tested on other grounds. Objections are raised on the nexus between input tax credit and output services. Credits linked to employees are questioned. Procedural lapses under Rule 89 are pointed out. These issues arise even where the character of the supply is no longer in dispute. In VKC Footsteps,⁸ the Supreme Court emphasized that entitlement to refund flows from the statute and cannot be expanded by judicial interpretation. That principle also operates as a limit on administrative discretion. Conditions not found in Section 54 cannot be introduced at the refund stage.

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One difficulty still seen in practice is the tendency to revisit export classification during refund adjudication. Issues examined earlier are reopened, sometimes indirectly. The statute does not speak to this situation in clear terms. How far such reopening is permissible remains a live question.

Continuing uncertainty

The recent decision of the Supreme Court has shifted the ground. What was earlier treated as an open question whether education consultancy services qualify as exports and support refund of unutilized ITC has been addressed on the basis of contractual recipient identity. The Court has proceeded on who is engaged and who pays, rather than on who incidentally benefits, and has applied the intermediary provision within its statutory limits.

That does not mean every dispute will disappear. Questions are likely to persist where contracts are loosely drafted or consideration flows in mixed forms. What can no longer be sustained, however, is the broader assumption that the presence of students in India, by itself, defeats export status.

About the author:

Janaki S. Nair is a tax law researcher and advocate with an LL.M. in Taxation from Jindal Global Law School. The work primarily focuses on indirect tax litigation, GST, and international taxation, with a strong interest in the constitutional and policy dimensions of tax law.

• NB.: The author certifies that the work is original. Views expressed are personal.

Footnotes

¹ Central Goods and Services Tax Act 2017, s 54; Integrated Goods and Services Tax Act 2017, ss 2(6), 13(8)(b).

² Global Reach Education Services Pvt. Ltd. v. Union of India, 2018 (10) GSTL 628 (Cal)

³ Union of India v KC Overseas Education Pvt Ltd, 2025 (9) TMI 469 (SC)

⁴ Commissioner of CGST v Northern Operating Systems Pvt Ltd (2022) 7 SCC 321.

⁵ Union of India v Mohit Minerals Pvt Ltd (2022) 4 SCC 173

⁶ Integrated Goods and Services Tax Act 2017, ss 2(6), 13; Central Goods and Services Tax Act 2017, ss 2(93), 54.

⁷ GoDaddy India Web Services Pvt Ltd v Commissioner of Service Tax 2016 (46) STR 806 (Tri); Ernst & Young LLP v Assistant Commissioner of State Tax 2021 (47) GSTL 69 (Bom).

⁸ Union of India v VKC Footsteps India Pvt Ltd (2022) 2 SCC 603.