2019 (3) TMI 1012 - AAAR - GST

Appellate Authority Upholds Decision on GST Exemption for UCMAS Abacus Activities

In Re: M/s. Omnisoft Technologies Private Limited

The appellate authority confirmed the ruling of the Gujarat Authority for Advance Ruling (GAAR), stating that M/s. Omnisoft Technologies Pvt. Ltd. is not ... Exemption from GST - activity provided by UCMAS using abacus - applicability of Entry No. 80 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - challenge to AAR decision - Held that:- N/N. 9/2003-Service Tax dated 20.06.2003 and N/N. 24/2004-Service Tax dated 10.09.2004 provided exemption from taxable services provided in relation to commercial training or coaching by a recreational training institute. ‘Recreational Training Institute’ was defined in those Notifications as a commercial training or coaching centre which provides coaching or training relating to recreational activities such as dance, singing, martial arts, hobbies. Hon’ble CESTAT in the case of FAST ARITHMETIC VERSUS ACCE, ST & EOU DIVISION, MANGALORE [2009 (5) TMI 70 - CESTAT, BANGALORE] held that the abacus training programme imparted is mainly to create interest in children for mathematics and also to enhance their thinking capacity. It is held that the entire thing is done by employing methods of play so as to make the whole thing interesting and by no means, this activity could be compared with the activities undertaken by commercial coaching or training centre. It was further held that Notification Nos. 9/2003-Service Tax dated 20.06.2003 and Notification No. 24/2004-Service Tax provided specific exemption for recreational training institute and vocational training institute. It was held that the activities of the appellant therein would more appropriately be classified as recreational. It is settled principle of law that exemption notification has to be read strictly so far as the eligibility is concerned. When the wordings of the Notification are clear and unambiguous, they must be given effect to. By a strained reasoning, benefit cannot be given when it is clearly not available. The appellant has failed to establish that activities carried out by them are covered under Entry No. 80 of N/N. 12/2017-Central Tax (Rate). Decision of AAR upheld. Issues:1. Qualification for exemption from GST for activities provided by UCMAS using abacus.Analysis:Issue 1: Qualification for exemption from GST for activities provided by UCMAS using abacusThe appellant, M/s. Omnisoft Technologies Pvt. Ltd., submitted that the UCMAS program enhances children's mental abilities through tools like ABACUS, Arts, and Various Memory enhancing Techniques. UCMAS is a child development program based on Visual Arithmetic and Abacus, aiming to boost brainpower in children aged 4-13 years. The appellant sought an advance ruling from the Gujarat Authority for Advance Ruling (GAAR) on whether the activity provided by UCMAS using abacus qualifies for exemption from GST.The GAAR ruled that M/s. Omnisoft Technologies Pvt. Ltd. is not entitled to the exemption provided under specific notifications related to GST. The appellant, aggrieved by this ruling, filed an appeal challenging the decision. The appellant cited previous judgments from CESTAT cases with similar facts to support their claim for exemption. However, the GAAR differentiated the previous cases based on the scope and applicability of the notifications in question.Upon examination, it was found that the notifications cited by the appellant pertained to different activities and did not align with the specific exemption criteria under the relevant GST notification. The GAAR emphasized that the activities of the appellant did not fall under the category of recreational activities relating to art or culture, as required for exemption. The GAAR's interpretation of the term 'Art' was upheld, and it was concluded that the appellant's activities did not qualify as training or coaching in recreational activities relating to art.The appellant further argued that the GAAR misinterpreted the classification under the GST regime, specifically referring to Service Accounting Code 9996 in the relevant notification. However, the appellant failed to provide substantial evidence to demonstrate that their activities fell within the specified exemption criteria. It was reiterated that exemption notifications must be strictly interpreted, and in the absence of clear eligibility, benefits cannot be extended.Ultimately, the appellate authority confirmed the GAAR's ruling, rejecting the appeal filed by M/s. Omnisoft Technologies Pvt. Ltd. The judgment emphasized the importance of aligning activities with specific exemption criteria outlined in GST notifications and the need for clear eligibility to claim exemptions effectively.