Ruling: Collecting exam fees for students qualifies as pure agent service, excluded from taxable value.

The Authority ruled that the activity of collecting exam fees from students and remitting them to universities without any value addition qualifies as a service provided as a pure agent. Therefore, the value of this service is excluded from the taxable value of the applicant as per Rule 33 of the Central GST Rules and Karnataka GST Rules.

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Issues:
1. Whether the activity of collecting exam fee from students and remitting it to universities without any value addition constitutes a taxable service.

Analysis:
The applicant, a private limited company providing coaching and training services, sought an advance ruling on the taxability of collecting exam fees from students and remitting them to universities without any profit element. The applicant argued that they act as a pure agent in such transactions, merely facilitating the payment process without adding any value. During the personal hearing, the applicant's representative reiterated that the company provides coaching services across various disciplines and acts as a conduit for exam fee payments to educational institutions.

Upon examining the nature of the applicant's activities, the Authority noted that the applicant indeed offers coaching and training services but clarified that the tax liability for these services was not under consideration in this ruling. The Authority further highlighted that the applicant's role as an educational consultant did not qualify them as an educational institution under the relevant tax provisions.

The Authority referred to Rule 33 of the CGST Rules 2017, which outlines the conditions for a supplier to be considered a pure agent. It stipulates that if a supplier acts as a pure agent of the recipient and meets certain criteria, the expenditure incurred on behalf of the recipient can be excluded from the value of supply. The applicant's collection and remittance of exam fees without any additional charges, solely on behalf of the students, aligns with the definition of a pure agent as per the rule.

In conclusion, the Authority ruled that the activity of collecting exam fees from students and remitting them to universities without any value addition qualifies as a service provided as a pure agent. Therefore, the value of this service is excluded from the taxable value of the applicant as per Rule 33 of the Central GST Rules and Karnataka GST Rules.

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