Support Services To Overseas Group Companies Are Exports, Not Intermediary Services: GSTAT New Delhi

The Goods and Services Tax Appellate Tribunal (GSTAT) bench in New Delhi delivered a ruling establishing that back-office and support services rendered to overseas group companies constitute export of services rather than intermediary services. This distinction determines whether such transactions attract zero-rated export status under the extant tax statutes. Tax authorities had previously contested the classification of certain intra-group support arrangements. Under the legal framework, an intermediary is strictly defined as a broker, agent, or intermediary who facilitates the provision of services between two or many parties, excluding a person who supplies such services on their own account.

When an Indian entity provides operational, administrative, or technical support directly to its foreign parent or affiliate on a principal-to-principal basis, it acts as the primary service provider rather than a broker. Consequently, fulfilling the conditions of export of services allows businesses to claim refunds of input tax credits without levying domestic consumption taxes. Tax professionals and corporate legal advisors must review existing inter-company service agreements to ensure they reflect principal-to-principal arrangements rather than agency functions.

Companies affected by similar classification disputes should rely on this precedent when defending their export claims before departmental adjudicating authorities. Bottom line: this ruling protects outbound service providers from unintended domestic tax liabilities on cross-border group transactions.