• Dated 02^nd November, 2026

Services Provided to Foreign Parent Company on Own Account Held Not to Constitute Intermediary Services; Export Refund Allowed: GSTAT Delhi

BRIEF FACTS:

The Assessee, an Indian subsidiary of a foreign company based in Australia, entered into a Master Services Agreement dated 7 December 2016 with its parent company for providing marketing, promotion and business-support services, including IT-enabled marketing services and student recruitment and admission support. The Assessee provided these services under an independent contractual arrangement and received consideration from the foreign parent company in foreign currency on a cost-plus basis, with a markup of 16%. The Department rejected the Assessee's claims for refund of unutilised Input Tax Credit on the ground that the services constituted "intermediary services", apart from raising other objections relating to the place of supply and supporting documents. Aggrieved by the rejection of the refund claims, the Assessee pursued appellate proceedings before the GST Appellate Tribunal.

ASSESSEE'S CONTENTION:

The Assessee contended that the services provided to its Australian parent company were supplied on its own account and did not constitute intermediary services under Section 2(13) of the IGST Act, 2017. It was submitted that the Assessee neither acted as an agent or broker nor arranged or facilitated a separate supply between two other parties. The Assessee performed substantive marketing and business-support services under the Master Services Agreement, had no authority to bind the Australian parent company, and had no contractual relationship with the local authorised advisors engaged by the Australian entity. The Assessee further submitted that the cost-plus remuneration arrangement supported the independent nature of the services provided. Accordingly, it contended that the services qualified as exports under Section 2(6) of the IGST Act, with the place of supply outside India under Section 13(2), and that the rejection of refund claims on the ground of intermediary services was unjustified.

DEPARTMENT'S CONTENTION:

The Department contended that the services provided by the Assessee involved student recruitment, marketing and assistance connected with educational services and, therefore, fell within the scope of intermediary services. It alleged that the Assessee facilitated transactions involving the Australian parent company and other parties, and that the services could not be treated as exports. The Department also raised objections relating to the place of supply, discrepancies in the names appearing in certain documents and other grounds for rejecting the refund claims. In a separate departmental appeal concerning the refund period April 2021 to March 2022, the Department challenged the order of the First Appellate Authority on the ground that the authority had remanded the matter to the original adjudicating authority, contrary to Section 107(11) of the CGST Act, 2017.

DECISION:

The GST Appellate Tribunal, Principal Bench, Delhi, held that the services provided by the Assessee to its Australian parent company did not constitute intermediary services under Section 2(13) of the IGST Act. The Tribunal observed that an intermediary arrangement requires the facilitation or arrangement of a distinct supply between two other parties. A service provider supplying services on its own account is excluded from the definition of an intermediary. In the present case, the Assessee provided substantive services under the Master Services Agreement, did not act as an agent or broker, had no authority to bind the Australian parent company and had no contractual relationship with the local authorised advisors. The Tribunal also considered the cost-plus remuneration structure and held that the services were supplied on the Assessee's own account. Consequently, the services qualified as exports, and the Tribunal allowed five refund appeals involving a total refund amount of ₹1,41,09,366, together with applicable interest.

BTA's COMMENT:

The decision reiterates that services provided by an Indian subsidiary to its foreign parent company do not automatically constitute intermediary services merely because they involve marketing, recruitment or support activities connected with third parties. The nature of the contractual arrangement, the actual role performed by the service provider, the existence of a separate main supply between other parties and the authority to act on behalf of another party are relevant considerations in determining whether the services fall within Section 2(13) of the IGST Act. Where the Indian entity performs substantive services on its own account under an independent contractual arrangement with its foreign parent, the services cannot be classified as intermediary services merely because they support the business activities of the foreign recipient. The ruling is significant for Indian subsidiaries providing marketing, consultancy, recruitment and other support services to overseas group entities and reinforces the importance of examining the actual contractual and commercial arrangements while determining export eligibility and refund claims

Case Reference- Navitas Eduservices Pvt. Ltd. v. Commissioner of CGST, South Delhi, (2026) 47 Centax 306 (Tri. – GST – Delhi), GSTAT Principal Bench, Delhi, decided on 14 October 2026.

Author- Shristy Pathak

Edited by- Madhurima Bose