The GST Appellate Tribunal (GSTAT), Principal Bench, New Delhi, has held that marketing, promotion, business support and IT-enabled services supplied by an Indian company to its overseas parent on its own account qualify as export of services and cannot be treated as intermediary services merely because they support the recruitment of students for foreign educational institutions.
The Bench of Justice (Retd.) Dr. Sanjaya Kumar Mishra (President) and Anil Kumar Gupta, (Technical Member) set aside the rejection of five refund claims and directed the refund of unutilised input tax credit totalling ₹1,41,09,366, along with interest as specified in its order.
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The bench held that the first appellate authority cannot send a matter back to the original adjudicating authority for reconsideration, since Section 107(11) of the Central Goods and Services Tax Act, 2017 expressly prohibits such a remand.
The Australian company operates in the international education sector, providing pre-university, managed campus and university pathway programmes in collaboration with educational institutions across countries including Australia, Canada and the United Kingdom.
Under a Master Services Agreement dated December 7, 2016, the Indian company provided marketing, promotion and business support services to Navitas Australia. Its remuneration was calculated on a cost-plus basis, with a 16% markup, and received in Australian dollars.
The services included supporting marketing strategies, assisting recruitment advisors, participating in exhibitions, helping with student application and document verification processes, and coordinating promotional activities. The company also supplied IT-enabled services, including web development, digital design, marketing automation, social media campaigns and content development.
Navitas India sought refunds of unutilised ITC on exports made without payment of tax for various periods between 2018 and 2023. The tax authorities rejected the claims principally on the ground that its activities constituted intermediary services rather than exports.
Navitas India argued that it supplied substantive services to its Australian parent as an independent subcontractor, using its own employees, infrastructure and resources.
It relied on contractual provisions identifying it as an independent contractor and excluding an agency relationship. The agreement also restricted it from incurring obligations on behalf of Navitas Australia without prior written instructions.
The company maintained that its contractual relationship, invoicing and receipt of consideration were exclusively with Navitas Australia. It had no contractual relationship with the partner universities or the recruitment advisors.
The recruitment advisors operated under separate agreements with Navitas Australia and received commissions linked to successful student enrolments. Navitas India, by contrast, received cost-plus remuneration for the services it supplied.
On this basis, the company submitted that it fell within the exclusion in Section 2(13) of the IGST Act for persons supplying services on their own account.
The Department argued that the company’s activities facilitated the supply of education services between foreign educational institutions and prospective students in India.
It relied on descriptions in the service agreement and transfer pricing documents referring to support for advisors, participation in exhibitions, liaison with recruitment agents and assistance with admissions.
According to the Department, these activities involved a main supply of education and an ancillary supply facilitating that education, satisfying the requirements of an intermediary arrangement.
The Department also raised objections concerning differences in company names appearing in the agreements and invoices. For certain periods, it invoked Section 13(3)(b) of the IGST Act to contend that the place of supply was in India because the services required physical presence.
Navitas disputed these objections and maintained that the overseas corporate entity was the recipient of its services.
The Tribunal examined Section 2(13) of the IGST Act and CBIC Circular No. 159/15/2021-GST, which explains the essential features of intermediary services.
It observed that an intermediary arrangement requires at least three parties and two distinct supplies: a main supply between principals and a separately identifiable service of arranging or facilitating that supply.
The presence of several entities in a wider business arrangement does not, by itself, establish that a particular service provider acts as an intermediary. The role performed by that provider and the nature of its own supply remain central to the classification.
Applying these principles, the Tribunal found that Navitas India supplied services as a subcontractor on its own account. It provided the contracted supply rather than merely arranging a supply between another supplier and its customers.
The Bench also noted that Navitas India did not act as a broker or agent and lacked authority to bind Navitas Australia. Following its earlier decision in Dow Chemical International Pvt. Ltd., it held that the words “any other person” in the intermediary definition must be read in the context of persons having characteristics similar to brokers or agents.
The Tribunal placed particular emphasis on the CBIC clarification that subcontracting a service does not amount to an intermediary arrangement.
It referred to the circular’s illustration explaining that a subcontractor may perform services for its contracting party even while dealing with that party’s customer. Such interaction does not change an own-account supply into intermediary services.
In the present case, the Bench found that Navitas India’s contractual responsibilities involved the actual provision of marketing and support services to Navitas Australia.
It accordingly concluded that the company’s services fell within the definition of export of services under Section 2(6) of the IGST Act.
The Tribunal relied on decisions concerning business support, outsourcing and education consultancy services, including Genpact India, Blackberry India and Columbia Sportswear India Sourcing.
It also discussed the Delhi High Court’s decision in Fateh Education Consulting (P) Ltd., which addressed marketing and recruitment support supplied to foreign universities.
Drawing on that decision and the precedents discussed in it, the Tribunal noted that incidental assistance to students in India does not, by itself, make the Indian service provider an intermediary. The contractual recipient, the person responsible for paying consideration and the nature of the services supplied are material considerations.
The Bench declined to follow the advance rulings relied upon by the Department, preferring the judgments of the High Courts governing the issue.
The Tribunal also rejected the objection concerning differences between the names appearing in the service agreement and export invoices.
It noted the company’s earlier name and subsequent change in its corporate identity, observing that this background was not seriously disputed by the Department.
The Bench therefore found no substance in treating the differences in names as a basis for rejecting the claims.
The operative direction refers to interest at 6% and 9%, respectively, from the dates specified in the order. It does not separately identify the application of each rate to the individual claims.
The connected departmental appeal, APL/13/PB/2026, concerned an order by which the first appellate authority had annulled the original decision and directed the adjudicating officer to reconsider the matter.
The Tribunal held that Section 107(11) permits the first appellate authority to confirm, modify or annul an order, but expressly prevents it from referring the case back to the adjudicating authority.
It ruled that an authority cannot avoid this prohibition by describing its decision as an annulment while effectively directing fresh adjudication.
The Department’s appeal was consequently allowed to that limited extent. The Tribunal sent the matter back to the first appellate authority for a decision on merits in accordance with the principles laid down in the common order.
The Bench clarified that its own power to remand under Section 113(1) of the CGST Act is distinct from the restricted powers of the first appellate authority.
It directed that both parties receive a reasonable opportunity of hearing and that the matter be decided expeditiously, preferably within six weeks of the first appellate authority taking cognizance of the Tribunal’s order.
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