In the ever-evolving landscape of India's GST regime, businesses providing cross-border services often find themselves navigating a maze of classifications and tax liabilities. A recent judgment from the High Court of Madhya Pradesh at Indore sheds light on this complexity, emphasizing the importance of due process while reminding us that challenging a show-cause notice isn't always straightforward. Delivered on August 5, 2025, in M/s Study Metro Edu Consultant Pvt. Ltd. v. Joint Director and Others (Writ Petition No. 30467 of 2023), the case highlights key issues around GST on intermediary services, export of services, and the limits of judicial intervention in tax proceedings. Let's break it down step by step, exploring the facts, legal debates, and the court's balanced perspective—offering valuable insights for education consultants, tax professionals, and entrepreneurs alike.

The Facts: A SaaS Company's Cross-Border Services Under Scrutiny

At the heart of this dispute is M/s Study Metro Edu Consultant Pvt. Ltd., an Indore-based company registered under the Companies Act, 2013, and compliant with GST laws. Operating as a 'Software as a Service' (SaaS) provider, the firm specializes in student recruitment solutions. This includes:

1. Advisory services to foreign universities: Helping overseas institutions recruit Indian students.
2. Services to students: Guiding aspiring students through admissions to foreign universities.

The company receives payments from both parties. For student-facing services, it dutifully pays GST. However, it argues that fees from foreign universities qualify as 'export of services' under Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act), exempting them from GST since the recipient is outside India.

Trouble began when the Directorate General of Goods and Services Tax Intelligence (DGGSTI) initiated an inquiry. Viewing the petitioner as an 'intermediary' under Section 2(13) of the IGST Act—essentially acting as an agent for foreign universities—the authorities issued summons under Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act). The company's director, Abhishek Bajaj, appeared multiple times, providing documents and statements.

Despite the petitioner's detailed responses denying intermediary status, a notice dated November 18, 2022, alleged non-payment of GST. The inquiry culminated in a comprehensive show-cause notice (SCN) on September 30, 2023, under Section 74 of the CGST Act, demanding why GST shouldn't be levied, along with interest and penalties. Feeling cornered, the company filed a writ petition under Article 226 of the Constitution, seeking to quash the SCN.

This scenario resonates with many in the education sector, where global aspirations meet local tax hurdles. It's a reminder that what seems like a straightforward export can quickly turn into a contentious tax battle.

Core Legal Discussion: Intermediary vs. Export Services and the Validity of Show-Cause Notices

The case revolves around two pivotal legal questions:

1. Classification of Services Under GST:
2. Petitioner's Stance: The company insisted its services to foreign universities aren't intermediary in nature. As per Section 2(13) of the IGST Act, an intermediary facilitates supply without being the principal. Here, the petitioner acts independently, providing direct advisory solutions. Moreover, even if classified as intermediary, the place of supply (Indore) makes it an intra-state transaction under Section 8(2) of the IGST Act, not attracting IGST for inter-state levies.
3. Authorities' View: DGGSTI countered that the petitioner fits the intermediary definition, acting on behalf of foreign universities to recruit students. This places the supply in India, subjecting it to GST. The SCN detailed findings, rejecting the export claim and quantifying liabilities.
4. Maintainability of Writ Against SCN:
5. The petitioner argued the SCN was premeditated and exhaustive, with findings in paragraphs 29-30 (agency role), 36-37 (intermediary status), and 70-72 (liability determination). Issued by a Joint Director but to be adjudicated by a subordinate (Deputy/Assistant Commissioner), it violated natural justice principles. Citing Supreme Court precedents like Siemens Limited v. State of Maharashtra (2006) and Oryx Fisheries Pvt. Ltd. v. Union of India (2010), they claimed such notices render adjudication futile when bias or predetermination is evident.
6. Respondents, represented by the CGST Department, invoked Circular No. 31/05/2018-GST (dated February 9, 2018), clarifying that DGGSTI can issue SCNs, but adjudication rests with executive officers in the taxpayer's jurisdiction. They emphasized that SCN observations are prima facie, not binding, ensuring fair play. Supporting judgments included Abhishek Mundhra v. A.D.G., D.G. of Revenue Intelligence (2015) and others, reinforcing that writs against SCNs are rarely entertained unless jurisdictional errors exist.

This debate underscores a broader tension in GST law: balancing aggressive tax enforcement with taxpayer rights. For businesses, it's a human story—entrepreneurs building innovative services only to face bureaucratic scrutiny that could disrupt operations.

The High Court's View: Upholding Due Process Without Interference

In a reasoned order by Justices Vivek Rusia and Binod Kumar Dwivedi, the court dismissed the writ petition, refusing to quash the SCN. Key takeaways from their analysis:

1. SCN Findings Are Preliminary: While acknowledging the SCN's detail, the court clarified these are not final adjudications but evidence of "proper application of mind" during investigation. The petitioner had fully participated, submitting replies and materials, which the DGGSTI addressed before issuing the notice.
2. Separation of Powers: Drawing on the 2018 Circular, the court noted that investigation (DGGSTI) and adjudication (executive commissionerate) are distinct. The adjudicating authority—quasi-judicial in nature—must decide independently, uninfluenced by SCN observations, even if the issuer is superior.
3. Flexibility for Fairness: Addressing the subordination concern, the court observed that respondents are open to adjudication by a higher rank (Additional/Joint Commissioner) via corrigendum if requested. This ensures impartiality without derailing proceedings.
4. No Grounds for Writ: Aligning with settled law, the court held that writs against SCNs are exceptional, only for jurisdictional flaws or clear premeditation. Here, none existed; the process was exhaustive but fair.

The judgment's human touch shines through in its directives: It explicitly states that investigative observations "shall not come in the way" of adjudication, protecting the petitioner from perceived bias. This approach fosters trust in the system, reminding us that courts prioritize procedural integrity over premature interventions.

Implications for Businesses: Navigating GST in the Education Sector

This ruling is a cautionary tale for education consultants and SaaS providers dealing in overseas services. It reinforces that 'export of services' claims must withstand scrutiny, especially when intermediary allegations arise. For SEO-savvy readers searching terms like "GST on intermediary services in education," "export of services under IGST," or "challenging GST show-cause notice," the message is clear: Engage early in inquiries, but exhaust statutory remedies before knocking on the High Court's door.

In a world where Indian talent fuels global education, cases like this highlight the need for clearer guidelines on service classifications. If you're in a similar boat, consulting a tax expert could prevent escalation. As Justice Rusia aptly noted, the system works when authorities adhere to fairness— a principle that keeps the wheels of justice turning for all.