Introduction:
The Rajasthan High Court recently dealt with an important issue concerning the interpretation of the term “intermediary” under the Integrated Goods and Services Tax Act (IGST Act), in a petition filed by IDP Education Ltd., an Indian subsidiary of IDP Australia. The case, IDP Education Indian Pvt. Ltd. v. Union of India & Ors. (2025 LiveLaw (Raj) 308), centered around whether services rendered under a bipartite agreement between the petitioner and IDP Australia could be classified as “intermediary services” under Section 2(13) of the IGST Act, or whether they qualified as export of services entitled to refund of IGST. The division bench comprising Justice K.R. Shriram and Justice Maneesh Sharma examined the arguments and provided a crucial clarification, ruling that the existence of three parties is essential for a transaction to qualify as intermediary services, and in the absence of such tripartite involvement, a bipartite agreement cannot be treated as intermediary in nature.
The petitioner, IDP Education Ltd., is an Indian subsidiary of IDP Australia, a global education services provider that assists students in securing admission to foreign universities. IDP Australia had entered into agreements with foreign universities to provide student enrollment services. Subsequently, IDP Australia sub-contracted certain obligations to its Indian subsidiary, IDP Education Ltd., under a principal-to-principal arrangement. The petitioner rendered services exclusively to IDP Australia and claimed IGST refunds on the basis that such services qualified as export of services under Section 16(3)(b) of the IGST Act. However, the Revenue authorities classified the petitioner’s services as “intermediary services,” denied export status, and rejected refund claims, prompting the petitioner to challenge the decision before the High Court.
Arguments on Behalf of the Petitioner:
Counsel for the petitioner strongly contested the Revenue’s classification of their services as intermediary services. It was argued that Section 2(13) of the IGST Act defined an intermediary as a person who arranges or facilitates the supply of goods or services between two or more persons but does not include a person who supplies such goods or services on his own account. Since the petitioner was directly supplying services to IDP Australia under a contractual arrangement, it was outside the scope of “intermediary.” The petitioner emphasized that its role was confined to fulfilling obligations sub-contracted by IDP Australia, and it neither arranged nor facilitated any supply between foreign universities and students.
It was further contended that the petitioner was not a part of the admission decision-making process of the universities, nor did it have contractual relations with students. The petitioner merely executed tasks delegated by IDP Australia. This made the relationship a clear bipartite one between IDP Education Ltd. and IDP Australia. The petitioner also referred to precedents, highlighting that in 2021, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) had examined the same agreement and held that the petitioner’s services did not fall under intermediary services. In addition, other jurisdictions under GST had similarly recognized the petitioner as an exporter of services. Based on these grounds, the petitioner urged the Court to set aside the Revenue’s order and direct the refund of IGST.
Arguments on Behalf of the Revenue:
The Department of Revenue opposed the petition, arguing that the petitioner was acting as an intermediary between IDP Australia, foreign universities, and students. According to the Department, the petitioner was facilitating the enrollment process by assisting IDP Australia in dealing with students in India, which in turn contributed to admissions in foreign universities. This facilitative role, the Revenue argued, brought the petitioner squarely within the ambit of “intermediary services” under Section 2(13) of the IGST Act.
The Revenue also maintained that since the place of supply of such intermediary services was deemed to be India under Section 13(8)(b) of the IGST Act, the petitioner’s services could not be treated as export of services. As such, refund of IGST was impermissible. They further asserted that the petitioner’s reliance on the CESTAT decision was misplaced, as tax authorities were not bound by such precedents in GST matters, and each case had to be evaluated independently under prevailing GST law. The Department therefore justified denial of IGST refund and classification of the petitioner’s activities as intermediary services.
Court’s Judgment:
After carefully examining the submissions and the contractual framework, the Rajasthan High Court sided with the petitioner, holding that the Revenue had wrongly classified the services as intermediary. The Court emphasized that the statutory definition of intermediary under Section 2(13) required the existence of at least three parties — the supplier, the recipient, and a third party who is connected through arrangement or facilitation. In the instant case, there were only two parties involved: the petitioner (IDP Education Ltd.) and IDP Australia.
The Court observed that the petitioner was not arranging or facilitating services between IDP Australia and the universities or students. Instead, it was performing its own obligations under a direct bipartite contract with IDP Australia. The Court pointedly remarked 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 bipartite arrangement.”
The Court also took note of the CESTAT ruling in favor of the petitioner, reiterating that the same agreement had already been adjudicated, and the petitioner had been held not to be an intermediary. This strengthened the Court’s reasoning that the Revenue had wrongly applied the definition of intermediary.
In light of these findings, the Court set aside the Revenue’s order and remanded the matter back to the adjudicating authority with directions to process the refund claimed by the petitioner. The judgment thus reaffirmed the principle that intermediary classification requires three-party involvement, and services rendered under a bipartite contract cannot be treated as intermediary merely because they relate indirectly to other parties.
Significance of the Ruling:
This judgment is significant for businesses engaged in cross-border service contracts, especially subsidiaries of foreign entities operating in India. By clarifying that bipartite arrangements do not qualify as intermediary services, the Court has provided certainty to service providers who directly contract with foreign principals but do not interact with end customers. The ruling also ensures that such service providers are eligible for export benefits and IGST refunds, thereby avoiding double taxation and undue financial burden.
Moreover, the judgment highlights the importance of contractual structures in determining tax liability under GST. It underscores that authorities cannot stretch the definition of intermediary to include bipartite arrangements, as doing so would be inconsistent with legislative intent and judicial precedents.