Services to Visvesvaraya National Institute of Technology not tax-exempt under Notification 12/2017-Central Tax (Rate)

The services provided to Visvesvaraya National Institute of Technology do not qualify for exemption under Serial No. 66 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017. Additionally, the rate of tax on services provided to VNIT is not nil as per Serial No. 3 of the same notification.

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Issues Involved:

1. Whether the services provided to Visvesvaraya National Institute of Technology, Nagpur (VNIT) qualify for exemption under Serial No. 66 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017, considering it to be an educational institution.
2. Whether the rate of tax on services provided to VNIT is nil as per Serial No. 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017.

Issue-wise Detailed Analysis:

Issue 1: Exemption under Serial No. 66 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017

The applicant, Security and Intelligence Services (India) Ltd, provides security services to VNIT, an educational institution established under the scheme sponsored by the Government of India and the Government of Maharashtra. VNIT has been conferred the status of a Deemed University and declared as an Institute of National Importance by an Act of Parliament.

The term "educational institution" under clause (y) of Part 2 of the notification means an institution providing services by way of:
- Pre-school education and education up to higher secondary school or equivalent.
- Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force.
- Education as a part of an approved vocational education course.

VNIT provides under-graduate, post-graduate, and doctoral programs in engineering, architecture, and science, qualifying it as an educational institution under clause (ii) of the definition. However, the proviso to Serial No. 66 states that the exemption applies only to institutions providing pre-school education and education up to higher secondary school or equivalent. Since VNIT does not fall under this category, the security services provided to VNIT do not qualify for exemption under Serial No. 66.

Issue 2: Rate of Tax under Serial No. 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017

Serial No. 3 of Notification No. 12/2017 exempts "pure services" provided to a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or to a Municipality under Article 243W of the Constitution. The term "Governmental authority" is defined as an authority or board set up by an Act of Parliament or a State Legislature or established by any Government with 90% or more participation by way of equity or control, to carry out any function entrusted to a Municipality under Article 243W or to a Panchayat under Article 243G.

VNIT, although established under a government scheme and declared as an Institute of National Importance, does not meet the criteria of being set up by an Act of Parliament or a State Legislature or having 90% or more government participation by way of equity or control. Furthermore, the security services provided do not relate to any function entrusted to a Panchayat or Municipality under the Constitution. Therefore, the services provided to VNIT do not qualify for exemption under Serial No. 3 of Notification No. 12/2017.

Conclusion:

1. The services provided to VNIT do not qualify for exemption under Serial No. 66 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017.
2. The rate of tax on services provided to VNIT is not nil as per Serial No. 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017.

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