GST Ruling on Intermediary Services and Export Status
The Appellate Authority ruled that marketing and HR services provided to a foreign company for an Indian client are taxable, not exports.
- Ruling
- HAAAR Order-In-Appeal No: HAR/2022-23/01, Dated: 07.05.2026
- Dated
- 07 May 2026
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company provided consulting services to a Malaysian firm for an Indian client.
- The authority classified these as intermediary services, not export of services.
- The services are taxable at 18% IGST, with no refund of input tax credit.
In short
The company asked if their consulting services for a foreign firm, which ultimately benefit an Indian client, qualify as an export of services under GST. Because the work involves coordinating services within India, the authority decided it is an intermediary service rather than an export. This means the company must pay 18% GST and cannot claim a refund for the tax paid on their business inputs.
What has changed
How it worked before
Many businesses assumed that providing services to a foreign entity automatically qualified as an export of services, regardless of whether those services were used to facilitate a transaction within India.
What has changed
The ruling confirms that if you act as a middleman arranging services between a foreign company and an Indian client, your work is treated as happening in India. You must charge 18% GST on these services and cannot treat them as zero-rated exports.
Who this affects
Indian service providers who perform marketing, HR, or consulting work for foreign companies that have clients based in India.
An example
A marketing agency in Pune helps a Singaporean firm manage a project for a Mumbai-based manufacturer. The agency asks if their fee is an export of services. Based on this ruling, the agency would likely be classified as an intermediary, meaning they must charge 18% GST instead of treating the service as a zero-rated export.
What you should do
Review your service agreements to see if you are facilitating transactions between foreign and Indian parties. Remember that an advance ruling only binds the company that asked and its specific tax office; it is not a universal law for your business. Consult your tax advisor to see if your specific contract structure matches this ruling.
If you do nothing
If you incorrectly classify your services as exports, you may fail to collect the required 18% GST from your client. If a tax officer later disagrees with your classification, you will be liable for the unpaid tax, plus interest and potential penalties. This can create a significant and unexpected financial burden for your business.
The terms explained
- Intermediary services
- A person or business that arranges or facilitates the supply of goods or services between two other parties.
- Export of services
- Services provided from India to a recipient located outside India, which are generally not subject to GST.
- Input tax credit
- The tax a business pays on its own purchases that it can use to reduce the tax it owes on its sales.
- Zero-rated supply
- A supply of goods or services that is taxed at a rate of 0%, allowing the business to claim a refund on the taxes paid for inputs.
The ruling in detail
Appellate Authority for Advance Ruling
M/s Maithani Enterprises, Gurugram, Haryana
HAAAR Order-In-Appeal No: HAR/2022-23/01, Dated: 07.05.2026 · Haryana
Questions before the authority
- What is the applicable GST tax rate in this case, and are the services provided by the applicant considered zero-rated services?
- Do the services provided by the applicant qualify as an export of services, and is the applicant entitled to a refund of Input Tax Credit (ITC) used for providing these services?
Facts
The appellant is a GST-registered service provider engaged in providing sales and marketing consulting and manpower/HR consulting services to M/s Meteora Consultancy, a company based in Malaysia. These services are utilized by M/s Meteora Consultancy to provide its own services to an Indian client, M/s Modenik Textiles Pvt. Ltd. The appellant sought an advance ruling on whether these services qualify as export of services and are eligible for a refund of Input Tax Credit.
Ruling
| Question | What the authority ruled |
|---|---|
| Applicable GST rate and zero-rated status | Taxable at 18% IGST and not considered zero-rated services Classified as intermediary services |
| Export of services and ITC refund eligibility | Does not qualify as export of services and not entitled to refund of Input Tax Credit Place of supply is in India |
The Appellate Authority upheld the original Advance Ruling, concluding that the services provided by the appellant are not export of services but are instead intermediary services. Consequently, the services are taxable at 18% IGST and the appellant is not entitled to a refund of unutilized Input Tax Credit.
Reasoning
The Authority determined that the appellant acts as an intermediary by arranging or facilitating services between M/s Meteora and its Indian client, M/s Modenik Textiles. Because the services are performed within India and involve coordination with local teams, the place of supply is deemed to be in India under Section 13(8)(b) of the IGST Act. Therefore, the services fail to meet the criteria for 'export of services' under Section 2(6) of the IGST Act. The Authority also relied on the definition of 'intermediary' under Section 2(13) of the IGST Act to classify the nature of the supply.
Provisions relied on
- Section 2(6) of the IGST Act, 2017
- Section 2(13) of the IGST Act, 2017
- Section 13(8)(b) of the IGST Act, 2017
- Section 16(1)(a) of the IGST Act, 2017
- Section 16(3)(b) of the IGST Act, 2017
- Section 54(3)(i) of the CGST Act, 2017
- Rule 89 of the CGST Rules, 2017
For the practitioner
This ruling reinforces the **strict interpretation of intermediary services** in the context of cross-border business support. It clarifies that services performed on-the-ground in India for a foreign entity, which facilitate a supply to an Indian client, will likely be treated as **taxable in India** rather than as an export. Practitioners should note that the presence of a tripartite arrangement is a key factor in denying the benefit of zero-rated supply.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2026-05/order_maithani_enterprises_gurugram_1.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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