IGST Act | Party Providing Services Under Bipartite Agreement Cannot Be Labelled As “Intermediary”: Rajasthan High Court

While hearing a petition against the decision of Department of Revenue by a company providing services to a foreign entity, Rajasthan High Court held that for someone to be called an “intermediary”, there had be existence of 3 parties in the contract, in the absence of which, the services rendered under a bipartite agreement could not be called “intermediary”.The division bench of Justice Mr. K.R. Shriram and Justice Maneesh Sharma was hearing the petition filed by a subsidiary of IDP Australia, a foreign entity assisting students with their enrolment with foreign universities. The petitioner, IDP Education Ltd., had entered into an agreement with IDP Australia on a principal to principal basis, wherein the latter had sub-contracted its services to the former, which it was obliged to provide to Foreign Universities. However, the ultimate authority to decide and finalize the admission of a student remained with IDP Australia. Based on this arrangement, the petitioner classified the services supplied by it to IDP Australia as export of services and claimed refund of IGST as per Section 16(3)(b) of the IGST Act. However, the State classified these services as “intermediary” with its place of supply being India, and denied the export status and in turn the IGST refund. Hence, the petition was filed before this Court. The counsel for the petitioner argued that as per the definition of “intermediary” under Section 2(13) of the IGST Act, only such person who arranged or facilitated the supply of services between two or more persons qualified as “intermediary”. A person who supplied services on his own conduct was excluded from this scope. It was submitted that since petitioner was providing its own services to IDP Australia, it was outside the scope of “intermediary”. The petitioner further highlighted that in 2021, in its own case, CESTAT had examined the very same agreement, and had concluded that the petitioner was not an intermediary. Similarly in other GST jurisdictions too, petitioner was held to be exporter of services. After hearing the contentions, the Court agreed with the arguments put forth by the counsel for the petitioner, and further opined that, “…services provided by petitioner are qua IDP Australia under specific contract or arrangement with it. Not more than two parties are involved in this arrangement, namely, petitioner and IDP Australia. For someone to be called an “Intermediary”, there needs to be existence of three parties in the contract, in the absence of which, petitioner cannot be called as “Intermediary…Petitioner has no say in the final admission process nor do they have any contractual arrangement with the Foreign Universities or the students and hence, their services are only rendered to IDP Australia under a bi partite arrangement.”In this background, and taking into account the CESTAT ruling, the matter was remanded to the adjudicating authority for processing refund claimed by the petitioner. Title: IDP Education Indian Pvt. Ltd. v Union of India & Ors. and other connected petitionsCitation: 2025 LiveLaw (Raj) 308Click Here To Read/Download Order

IGST Act | Party Providing Services Under Bipartite Agreement Cannot Be Labelled As “Intermediary”: Rajasthan High Court

Nupur Agrawal

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