2020 (1) TMI 1598 - AAAR - GST

Educational institution's conference exempt from GST under charitable entity category. No Input Tax Credit eligibility.

The appellant, a charitable society running an educational institution, organized a conference for students and staff. The Appellate Authority for Advance ... Exemption from GST - consideration received by the school from the participant school(s) for participation of their students and staff in the conference - exempted under entry No. 66 or entry No. 1 or entry or No. 80 or any other entry of the Notification No. 12 /2017- Central Tax (Rate) or will be chargeable to GST under CGST Act, 2017 & MPGST Act, 2017 or IGST Act, 2017? - appropriate category of the service and the appropriate Tax Rate? - Whether exemption provided to service providers of catering, security, cleaning, housekeeping, transportation etc. to an educational institution up to higher secondary be available to the Service Providers of the Appellant for services related to such conference? - eligibility of ITC of all the input services availed. HELD THAT:- The fundamental objection of the appellant is that the Applicant before the Authority of Advance Ruling was “Emerald Heights School Samiti” whereas the AAR has passed order in the name of “Emerald Heights School”. The appellant has stated that the service provider here is an entity registered under section 12AA of Income Tax Act, 1961, the non- consideration of such status has led to vitiated interpretation (s) of exemption (s) by ARA (the correct word here is AAR instead of ARA) - The appellant school organised a Conference (Programme) for its students & staff and students & staff of other Schools to develop amongst the students the cultural understanding, sensitise them to the community they are visiting, forge friendships, carry out social service and develop mind, body and soul through a range of culturally immersive experiences including local expeditions, sporting activities, and mindful practices, most especially a daily programme of yoga. The fundamental reason of rejection of application by AAR was that Applicant himself being the “school” is not registered as a Charitable institution under Section 12AA of the Income Tax Act' 1961 but as has been illustrated that “The Emerald Heights International School” is not the applicant. Applicant in this case, as is evident from the Application filed before AAR and Appeal filed before AAAR, is “Emerald Heights School Samiti” which owns and runs The Emerald Heights International School. This “Samiti” is registered as a Charitable institution under Section 12AA of the Income Tax Act' 1961 - It is quite common that Charitable Institutions own and run educational institutions and the benefits of GST accrue to these institutions. This had been the concept and practice during Service Tax Regime. The same has been duly explained by CBIC in its “e-version of GST Flyers at chapter number 39 of 51 chapters. Here the entry in schedule says training or coaching in recreational activities. Training and coaching services are to be provided in recreational activities. This recreational activity or activities should be related to “Arts or Culture or Sports”. The word “relating to” expands the scope of entry far wide. Any activity which is related to training or coaching is also covered under exemption entry. Thus it is crystal clear that the services provided by way of this conference are training and coaching relating to art &culture and the services are provided by a Charitable Entity Registered under section 12AA of Income Tax Act. Question “b” is automatically now irrelevant. Supply of services by other service providers to applicant / appellant - HELD THAT:- Section 95 defines the range of questions to be raised by Authority as “in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant”, thus, it is beyond the authority of AAR and hence that of AAAR. Input Tax Credit - HELD THAT:- Since the output supply is held to be exempt hence as per section 17 (2) there would be no eligibility of ITC to the appellant. Issues Involved:1. Tax exemption on consideration received for a conference.2. Appropriate category and tax rate for services if not exempted.3. Exemption for service providers to educational institutions.4. Eligibility of Input Tax Credit (ITC) for input services availed for the conference.Detailed Analysis:Issue 1: Tax Exemption on Consideration Received for ConferenceThe appellant, a charitable society running an educational institution, organized a conference for students and staff from various schools. The appellant argued that the consideration received for participation in the conference should be exempt under entry 66 or entry 80 of Notification No. 12/2017-Central Tax (Rate). The AAR initially ruled against this exemption, stating that the school itself was not registered under Section 12AA of the Income Tax Act. However, the AAAR clarified that the appellant, being a registered charitable entity, qualifies for the exemption under entry 80, which covers services by way of training or coaching in recreational activities relating to arts, culture, or sports by charitable entities registered under Section 12AA. Therefore, the consideration received for the conference is exempt from GST.Issue 2: Appropriate Category and Tax Rate for Services if Not ExemptedGiven the ruling on Issue 1, this issue became irrelevant. The AAAR determined that the services provided during the conference fall under the exempt category of training or coaching in recreational activities related to arts, culture, or sports by a registered charitable entity.Issue 3: Exemption for Service Providers to Educational InstitutionsThe appellant sought clarity on whether service providers offering catering, security, cleaning, housekeeping, and transportation services for the conference would be exempt from GST. The AAAR noted that under Section 95 of the GST Act, the authority can only address questions related to the supply of goods or services by the applicant. Since the service providers were neither applicants nor appellants, this question was beyond the authority's jurisdiction.Issue 4: Eligibility of Input Tax Credit (ITC) for Input Services Availed for the ConferenceThe AAAR ruled that since the output supply (the conference services) is exempt under entry 80 of Notification No. 12/2017-Central Tax (Rate), the appellant is not eligible for ITC on input services used for the conference. This is in accordance with Section 17(2) of the GST Act, which disallows ITC on inputs used for exempt supplies.Conclusion:1. The consideration received for the conference is exempt from GST under entry 80 of Notification No. 12/2017-Central Tax (Rate).2. The appropriate category of services is covered under the exemption for training or coaching in recreational activities related to arts, culture, or sports by a charitable entity.3. Questions regarding the exemption for service providers to the educational institution are beyond the authority's jurisdiction.4. The appellant is not eligible for ITC on input services used for the conference due to the exempt nature of the output supply.