GEXCOM/LGL/HC/89/2022-LEGAL-O/o Pr COMMR-CGST-MUMBAI(S)

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OFFICE OF THE COMMISSIONER

Of CGST &C.EX, MUMBAI SOUTH

13TH Floor, Air-India Building, Nariman Point,

Mumbai - 400 021

Tele- 022-22897751 / 22897708.

Email – ltrmumbaisouth@gmail.com

Top Priority./High Court Matter.

F.No. F. No. CGST/MS/LTR/HC/IDP/124/2022-23
Mumbai, January, 2023.
To,
Shri Vijay Harjivandas Kantharia,
(Senior Panel Counsel)
Chamber No. 16, D.G. Chambers,
100-104 Nagindas Master Road,
Fort, Mumbai-400023.

Sir,
Sub: Para wise comments for preparing Affidavit in reply to defend the case of
the respondents in W.P. (L) No. 34457 of 2022 filed by M/s. IDP Education
India Pvt Ltd Vs. Union of India & Ors. in the High Court of Bombay --reg.
---------------

This is to inform that a W.P. (L) No. 34457 of 2022 filed by M/s. IDP Education
India Pvt. Ltd. which is likely to be heard before the Hon’ble High Court of Bombay and
the said case is required to be defended on behalf of the department.

2. The parawise comments to the said petition on the basis of available information is
submitted for preparation of Affidavit-in-reply, as below.

Synopsis: The Petitioner has described in short, events from 01.07.2017 to 22.03.2022
that took place leading to present W.P. All events being factually dated no comments are
made on the same. However, in points to be urged the petitioner has claimed O-I-A dated
23.03.2022 to be untenable & unsustainable, which is incorrect.

Para 1 to 4: In these paras the Petitioner has given the description of his company & the
circumstances which he feels as compelling to file W.P. The contents of paragraph do not
warrant any reply.

Para 5 to 25: In these paras, titled SOF, brief facts of the case provisions of Section 16 of
IGST Act, 2017, Section 2(6), Section 13 ibid are quoted & facts specific to the petitioner
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which describes their transaction with M/s IDP Australia are narrated, hence no comments
are warranted.

Para 26: After narrating the findings in O-I-O dated 19.07.2021 & O-I-A dated
23.03.2022, the Petitioner is claiming the speaking order to be arbitrary & baseless. The
petitioner’s argument is based on their contention that since for similar transactions
Telangana/Kerala GST authorities have granted refund, the same should be granted at
Mumbai GST also. However, appellant authority in the OIA has addressed this issue
wherein he hold that the facts and grounds placed before Telangana/Kerala authority are
not on records therefore no comments can be offered on the same. Further, refund
sanctioning authority is an independent quasi judicial authority & need to consider the facts
of each case independently, as the circumstances and facts, may & keep varying from
transaction to transaction. The allegations of arbitrary order or unlawful holding of refund
are all wrong as specific, legal & speaking orders have been passed by both the sanctioning
authority and more so by appellate authority.

GROUNDS

(A1 to A 14) : The petitioner M/s IDP Education India Pvt. Ltd is a wholly owned
subsidiary of M/s IDP Education Ltd.(IDP Australia) and primarily engaged in registration
of candidates for international English Language Testing System test and overall
administration of the test thereafter. They have an agreement with M/s IDP Australia for
providing “Student Recruitment Services” and has wrong fully claimed that the transaction
between themselves and M/s IDP Education, Australia amounts to “export” which is
outside the realm of GST.

The Export of services has been defined in Rule 2(6) of IGST Rule, 2017, as under:

“export of service” means the supply of any services when:-

i. The supplier of service is located in India;

ii. The recipient of service is located outside India;
iii. The place of supply of service is outside India;
iv. The payment for such service has been received by the supplier of service in
convertible foreign exchange (or in Indian rupees whenever permitted by the Reserve
Bank of India); and
v. The supplier of service and the recipient of service are not merely establishments of a
distinct person in accordance with Explanation-I in Section -8;

The nature of work is ascertained from the Service agreement between M/s IDP
Education, Australia and the petitioner. The relevant clause of the said agreement are
as under:
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Recitals:

1) The client (IDP Australia) operates student placement counselling offers

(both owned and licensed) in more than 30 countries around the globe.
2) The client has entered into agreements with education institutions
(Client education Institutions”) such as universities, school’s foundation
study education providers English language colleges and vocational
institutes for the provision of student placement services in a number of
overseas destinations.
1.2 Support Services:
i. IDP India shall provide the necessary services with regard to student
placement including without limitation, providing information and guidance on
courses that may be undertaken in client Education Institutions, qualification
requirements, counselling, enrolment services and other necessary services with
regard to the same.
ii. Notwithstanding anything contained in sub-clause(a) above, the Client
shall remain the ultimate authority for finalisation of the admission process
vesting in the Client for students approaching IDP India for further studies and
education to be under taken at Client Education Institutions.”
iii. Further, IDP India shall preserve necessary documents /records
regarding the application process undertaken by IDP India.
From the above, it is clear that the petitioner does not fulfil the condition(iii) of
the export of service i.e. place of supply of service is required to be outside
India.

As per the definition of “intermediary” under Section 2(13) of the IGST Act,

“intermediary means a broker, as agent or any other person, by whatever name called,
who arranges or facilitates the supply of goods or services or both or securities, between
two or more persons, but does not include a person who supplies such goods or services or
both or securities on his own account;

The petitioner, in this case, is not providing the supply on principal to principal basis
but is acting as an agent and just passing on the services related to student recruitment in
overseas universities. They are just passing on its principal’s services to Indian students
entirely and getting commission as certain amount from their principal, for such passing on
the services. As per the nature of work and sample contract, it is very much clear that they
are securely covered under the definition of “intermediary” and thus their transactions not
qualify as export. In the similar case of Global Reach Education Services Pvt. Ltd. (GST
AAAR West Bengal) it was considered as an intermediary in terms of Section 2(13) of the
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IGST Act and the services of the appellant were held to be not “Export of Service” under
the GST Act.

(A.15 to A.35)

The appellant has claimed that the Hon’ble CESTAT vide order dated 28.10.2021
in their own case after examining the nature of the transaction had held that the services
does not qualify as an intermediary. In this regard, the decision of Hon’ble CESTAT related
to the Service Tax period & the definition of “intermediary” under section 2(13) of the
IGST Act is not the same as that under erstwhile Rule 2(f) of the Place of Provisions Rules,
2012.

The definition of intermediary under Rule 2(f) of POP Rules is as under:

“Intermediary means a broker, an agent or any other person, by whatever name called,
who arranges or facilitates a provision of a service(hereinafter called the “main” service)
or a supply of goods between two or more person but does not include a person who
provides the main service or supplies the goods on his account.”,

Further, the definition of intermediary under clause (13) of Section 2 of the IGST Act,
2017 is as under:

“Intermediary means a broker, an agent or any other person, by whatever name called,
who arranges or facilitates the supply of goods or services or both or securities, between
two or more person but does not include a person who supplies such goods or services or
both or securities on his own account.”

From the above definitions, it is clear that term “main service” cannot be imported into
“intermediary”, as defined under the IGST Act, 201, as the definition of “intermediary”
under Section 2(13) of IGST Act, 2017 is not the same as that under Rule 2(f) of the POPS
Rules, 2012 in as much as under the GST an “intermediary” is an entity who
arranges/facilities for the supply of services of another entity, which may include ancillary
services, whereas under POPS Rules, 2012 the intermediary arranges/facilities for
provisions of services of the main service provider. The case law dated 28.10.2021 pertains
to their earlier Service tax matter on similar activities is different from the instant case, and
hence was considered not applicable.

(B.1 to B.8)

The Commissioner (Appeal-I), Mumbai vide order dated 23.03.2022 has rightly
observed that provision to determine the place of supply of services in this case is Section
13(8)(b) of the IGST Act, 2017 which is applicable and not Section 13(2) of the IGST Act
as claimed by the petitioner.

(C.1 to C.46)
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Circular No. 159/15/2021-GST dated 20.09.2021 as cited by the petitioner

categorically stated that illustration are only indicative and not exhaustive and the
implication of the same should be on case to case and on fact to fact basis. The facts of the
present case very much establish that the petitioner has very well acted as “intermediary” in
the instant case.

(D.1 to D.14)

The petitioner claims that only two parties to the transaction exist i.e. Petitioner
and IDP Australia. However, this is not factually correct in as much as the petitioner to
meet his obligations towards foreign universities have contracts with IDP Australia and
also have contract with Indian students. Therefore, there are three or more persons ( i.e.
foreign universities, IDP Australia, IDP India and Indian students) involved in the
transaction. There are two requirements for intermediary services under GST regime i.e. (1)
Presence of minimum three persons and (2) Two Distinct Supplies. The petitioner very
much fulfils both the requirements and fall under the category of “Intermediary”.

(E.1 to E.12)

The claim of petitioner that order is passed with pre-mediated mind set is wrong. In
spite of their contentions the study of their transaction shows presence of more than two
persons & two distinct supplies. The facts have been discussed after studying the
agreements hence there is no mind set pre- mediated as alleged. It is only the petitioner’s
impression. Therefore case laws cited in para E4 & E6 are not applicable to the case. The
facts and grounds placed before Telangana/Kerala authority are not on records therefore no
comments can be offered on the same.

(F.1 to F.33)

The petitioner claims that Section 13(8) of IGST Act is violative & derogative to
constitution provision i.e. Article 245, 246A, 26A etc. However, this claim is based on
premises that the Parliament has laid down law on cross-border /territories operation. This
is not the fact. The law has identified specific cases of transaction which can not be cross
territorial operation & then proposed levy. Therefore there is no violation of constitution
power. Similarly Article 286 restricts levy on export but for that the transaction has to
qualify as export. The petitioner does not qualify as “export of service” in as much as they
are rightly covered under the definition of “intermediary” as defined under the GST
regime. Therefore there is no violation of any article of the Constitution of India, 1950.

(G.1 to G. 16)

The claim of petitioner that Section 13(8) (b) of the IGST Act is ultra virus to
Section 5 of the IGST Act, described in the para is basically illogical. While Section 5 is
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charging section for inter state supplies, Section 8 & 7 provide situations where supply
would be treated as inter-state including exports.

(H.1 to H.12)

The facts and grounds placed before Telangana/Kerala authority are not on records
therefore no comments can be offered on the same. The petitioner has once again quoted &
discussed Section 13(8) of the IGST Act and claimed that the “consumption based tax”
concept of GST is defeated in the case. However, as submitted above there is no such
violation.

(I. 1 to I.14)

The petitioner is re iterating the orders as unreasonable, inconsistent and arbitrary,

which is not correct.

(J. 1 to J. 4)

The Petitioner has given justification for filing the W.P No. 34457 of 2022. The
contents of paragraph do not warrant any reply.

Para 27 to 33: Being averment of the petitioner relating to the petition, no comments to
offer.

Para 34: Being prayer of the petitioner, No comments to offer

In view of the above submissions the plea and prayers of the petitioners may be
disallowed since devoid of any merits and no relief of whatsoever nature may be given to
them, is our humble submission. Any adverse order may result in adverse implications in
the matter of Policy decision taken by the Parliament and shortfall of huge revenue to the
exchequer. I most respectfully submit that this Honourable Court may be pleased to dismiss
the petition since it is devoid of merits and deserves to be summarily rejected with costs.

This issues with the approval of the Principal Commissioner, CGST & CX. Mumbai
South.
Yours faithfully,

(Dharmender Singh)
Assistant Commissioner
CGST & C.Ex., Mumbai South

Copy for information & necessary action to: Mr. D.B. Deshmukh, Jr. Panel Counsel, being
associated with related matters.