2019 (7) TMI 314 - AAAR - GST

Appellate Authority affirms taxability for services not meeting composite supply conditions under GST Act.

In Re: M/s. Sarj Educational Centre

In Re: M/s. Sarj Educational Centre - 2019 (27) G.S.T.L. 131 (App. A. A. R. - GST) Issues involved:Appeal against Advance Ruling Order on composite supply and exemption eligibility under GST Act.Analysis:1. Composite Supply Classification:The Appellant, a private boarding house, sought clarification on whether its services of lodging and food to students constitute a composite supply under the GST Act. The West Bengal Authority for Advance Ruling (WBAAR) ruled that the services offered were mixed supplies, not composite, and hence taxable under Section 8(b) of the GST Act. The Appellant challenged this classification, arguing that the nature of boarding and lodging services differed significantly, with boarding including food and other amenities, while lodging was just accommodation. The Appellant contended that the entire charge should not be artificially segregated for taxation purposes.2. Educational Institution Status:The Appellant claimed to be an educational institution under the Exemption Notification, citing its provision of primary and secondary education through remedial classes. However, the WBAAR found that the Appellant did not meet the criteria of an educational institution as per the Exemption Notification's definition. The Appellant's direct billing to students and separate identity from the affiliated school indicated a lack of educational institution status, leading to the inapplicability of the exemption.3. Legal Definitions and Precedents:The Appellant referenced legal definitions of educational institutions and composite supplies to support their arguments. They highlighted the comprehensive nature of education and the bundling of services in a composite supply, as clarified by Circulars and previous rulings. The Appellant also cited a ruling from Chhattisgarh regarding hostel services to bolster their case for exemption from GST.4. Judicial Interpretation and Dismissal of Appeal:The Appellant's contentions were carefully examined by the Appellate Authority, which reiterated the criteria for composite and mixed supplies under the GST Act. The Authority upheld the WBAAR's ruling, emphasizing that the Appellant's services did not meet the conditions for a composite supply due to the independent nature of the various services provided. The lack of a principal service and natural bundling led to the dismissal of the appeal, affirming the original ruling's correctness.In conclusion, the Appellate Authority for Advance Ruling upheld the original ruling, dismissing the appeal against the classification of services as mixed supplies and the denial of exemption as an educational institution. The detailed analysis considered legal definitions, precedents, and the specific nature of the services provided by the Appellant, resulting in the affirmation of the taxability of the services under the GST Act.