The Karnataka High Court has annulled a Goods and Services Tax (GST) appellate order issued against an education services company, directing the tax authorities to process a refund exceeding Rs 3.91 crore, which includes applicable interest. The court determined that the services provided by the company do not qualify as those of an “intermediary” under the GST framework.
While permitting a writ petition, a bench of Justice S.R. Krishna Kumar contested an appellate order that had refused the refund for the tax period 2019-20 by considering the services of the applicants as intermediary services u/s 13(8)(b) of the Integrated Goods and Services Tax (IGST) Act, 2017.
The order has been quashed by the bench and directed the authorities to allocate the refund within 3 months.
The applicant had approached the HC asking for multiple reliefs, along with striking down section 13(8)(b) read with Section 8(2) of the IGST Act as unconstitutional and quashing the appellate order refusing the refund of collected GST for April 2019 to March 2020.
The issue is whether the services furnished by the applicant are pertinent to student recruitment and facilitation for overseas education can be categorised as intermediary services, which would draw GST in India and disqualify the transaction from being considered as an export of services.
As per the applicant, it was furnishing subcontracted services before its overseas parent entity and does not have any contractual relationship with foreign universities. It cited that the services amounted to the export of services and that refusal of refund was opposite to established judicial precedents and CBIC Circular No. 159/15/2021-GST dated September 21, 2021.
The applicant, at the time of the hearing, relied on favourable rulings previously delivered in its own case by the Bombay High Court and the Rajasthan High Court, as well as a detailed order of the CESTAT, New Delhi.
Previously, CESTAT ruled that the applicant was not acting as an intermediary, as it did not have any direct contract with foreign universities and was merely furnishing subcontracted services to its overseas parent, which solely received consideration from foreign institutions.
HC marked distinct rulings along with those of the Karnataka High Court itself, where similarly placed entities were held not to be intermediaries under the GST law. Such rulings held that subcontracted services furnished before the overseas entities, without direct engagement with end clients abroad, are entitled to export of services and are qualified for refund of collected ITC.
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The court, agreeing with the submissions of the applicant, said that the controversy was no longer res integra and covered under multiple binding precedents. It held that the appellate authority had made a mistake in refusing the refund even after clear judicial pronouncements to the contrary.
Therefore, the court quashed the appellate order refusing the refund and asked the GST authorities to allow the refund, including an applicable interest, which makes the payment expeditiously and in any case within 3 months from receipt of the order.
| Case Title | IDP Education India Pvt Ltd vs. The Union Of India |
| Case No. | No. 16975 of 2023 (T-Res) |
| For Petitioner | SRI. Kumar Harshavardhan, SMT. Preetha Mahadevan, Sri. Bharath Janarthanan |
| For Respondent | SMT. Subha.Sri. Aravind V Chavan |
| Karnataka High Court | Read Order |
