Composite supply classification under CGST Act for services to educational institutions

The services provided by the Applicant were deemed a composite supply under the CGST Act, with the conduct of examination identified as the principal supply. The Applicant was granted exemption under Entry 66 of Notification 12/2017 - Central Tax (Rate) for services provided to the University of Delhi, meeting the educational institution criteria. However, the exemption was not extended to agreements with other entities as it only applies to services directly provided to qualifying educational institutions.

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Issues Involved:
1. Whether the services provided by the Applicant can be considered a composite supply or a mixed supply under the CGST Act, 2017.
2. If considered a composite supply, whether the conduct of examination can be considered the principal supply.
3. Whether the exemption under Entry 66 of Notification 12/2017 - Central Tax (Rate) as amended by Notification No 02/2018 - Central Tax (Rate) shall be granted.
4. Whether the exemption applies to all agreements entered by the Applicant or only to services provided to educational institutions.

Issue-Wise Detailed Analysis:

1. Composite Supply vs. Mixed Supply:
The Applicant, engaged in providing exam, certification, and allied services, sought clarity on whether their services constitute a composite supply or a mixed supply under the CGST Act, 2017. The term "composite supply" is defined under Section 2(30) of the CGST Act as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one being the principal supply. In contrast, "mixed supply" under Section 2(74) refers to two or more individual supplies made together for a single price, where such supply does not constitute a composite supply.

The Applicant's services include pre-exam management, conducting examinations, and post-exam management, all of which are interconnected and naturally bundled. The Authority concluded that these services are composite supplies as they are naturally bundled and supplied in conjunction with each other, with the conduct of examination being the principal supply.

2. Principal Supply:
Given the composite nature of the Applicant's services, the next question was whether the conduct of examination could be considered the principal supply. The principal supply is defined under Section 2(90) of the CGST Act as the predominant element of a composite supply. The Authority determined that the conduct of examination is indeed the principal supply, as all other services provided by the Applicant are ancillary and facilitate the main activity of conducting examinations.

3. Exemption Under Entry 66:
The Applicant sought exemption under Entry 66 of Notification 12/2017 - Central Tax (Rate), as amended by Notification No 02/2018 - Central Tax (Rate). Entry 66 provides for exemption of services related to admission to, or conduct of examination by, educational institutions. The Authority noted that the exemption applies only if the services are provided to educational institutions as defined under the GST laws. The definition includes institutions providing pre-school education, education up to higher secondary school, education as part of a curriculum for obtaining a qualification recognized by law, or education as part of an approved vocational education course.

The Applicant provided an agreement with The Institute of Chartered Financial Analysts of India University, Sikkim, and a work order from the University of Delhi. The Authority found that the University of Delhi satisfies the definition of an educational institution, and thus, the services provided under this work order are exempt from GST. However, the agreement with the Institute of Chartered Financial Analysts of India University, Sikkim, had expired before the introduction of GST laws and was not considered.

4. Applicability of Exemption to All Agreements:
The Applicant queried whether the exemption would apply to all agreements or only to services provided to educational institutions. The Authority clarified that the exemption under Entry 66 is applicable only to services provided directly to educational institutions that meet the defined criteria. In the absence of detailed information about other clients, the Authority could not conclude whether services to other clients qualify for the exemption. Therefore, the exemption is restricted to the work order from the University of Delhi.

Conclusion:
- The services provided by the Applicant are considered a composite supply under Section 2(30) of the CGST Act, 2017.
- The conduct of examination is considered the principal supply.
- The exemption under Entry 66 of Notification 12/2017 - Central Tax (Rate), as amended, is available only when the provisions mentioned therein are satisfied by the Applicant.
- The exemption is applicable only to the work order from the University of Delhi and not to all agreements entered by the Applicant.

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