2020 (9) TMI 633 - AAR - GST

GST Exemption Granted for Educational Assessment Exams as Auxiliary Services to Schools.

In Re : M/s Educational Initiative Pvt. Ltd.

The AAR ruled that the educational assessment examination (ASSET) provided by the applicant to schools qualifies for GST exemption under Sr. No. 66(b)(iv) ... Exemption form GST - educational assessment examination (ASSET) with its variants) provided by the applicant to school/educational organization - exemption under Sr. No. 66(b)(iv) of the Not. No. 12/2017-CT (rate) dated 28.06.2017 and entry No. 69(b)(iv) of Not. No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 as well as equivalent SGST Notification - HELD THAT:- The applicant has to satisfy following two conditions in order to be eligible for exemption under Sr. No. 66(b)(iv): (i) The recipient of the services should be ‘Educational Institution’ as defined under the clause (y) of Paragraph 2 of the said Notification No. 12/2017-Central Tax (Rate). (ii) the supply of service should be in relation to the examination conducted by the educational institution. The applicant has stated that they are supplying “ASSET” multiple question to the Schools for the students of 3rd to 10th Standard. Therefore, such schools are already covered under the definition of ‘Educational Institution’, as provided under sub-clause (i) of clause (y) of Paragraph 2 of the said Notification No. 12/2017-Central Tax (Rate). It is found that schools are providing education to the students up to higher secondary standard and therefore fall under the definition of Educational Institution as defined vide clause (y) of Paragraph 2 of the said Notification. Whether the conditions mandated by entry 66 (b) (iv) of notification 12/2017-Central Tax as reproduced are fulfilled or not as far as the services relating to conduct of examination by, such institution; up to higher secondary? - HELD THAT:- It comes out that schools taking ASSET will use its results for its examination process and overall assessment of the students. The Schools uses ASSET for the purpose of assessment and diagnostic assessment of its students. ASSET uses multiple–choice question to focus on measuring how well SKILLS and CONCEPTS have been understood by the students. The basic nature of ASSET service is an examination to be conducted by Education Institution (School) but outsourced to the Educational Initiatives (EI). We also find from the submissions of applicant that ASSET is an educational assessment exam taken at school and it does not envisage any kind of coaching and/or training of teachers or administrators - under ASSET, they provide a set of questions on various subjects which are set by them based on the class level, board (like state or CBSE or ICSE etc) and the methodology adapted by the school for teaching. We find from the sample copies of agreements submitted by the applicant that they make contract with the Schools for supply of ASSET multiple questions of various subjects to their students. Thus, the services have been provided to the schools in relation to conduct of examination of students by such educational Institutes - In UNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. [2003 (10) TMI 47 - SUPREME COURT] Honorable Supreme Court, while interpreting the term ‘relating to’ and ‘in relation to’, has assigned wide and broad view of the term. Therefore, the second condition for availing the exemption has also been satisfied in the instant matter. Thus, exemption is available in respect of ASSET services provided to educational institution. Issues Involved:1. Whether the educational assessment examination (ASSET) provided by the applicant to schools/educational organizations is exempt from payment of GST under Sr. No. 66(b)(iv) of Not. No. 12/2017-CT (Rate) dated 28.06.2017 and entry No. 69(b)(iv) of Not. No. 9/2017-Integrated Tax (Rate) dated 28.06.2017.Detailed Analysis:1. Nature of ASSET Services:- The applicant, M/s. Education Initiatives Pvt. Ltd., provides ASSET (Assessment of Scholastic Skills Through Educational Testing) to schools for diagnostic assessment of students.- ASSET is a skill-based assessment exam using multiple-choice questions to measure students' understanding of skills and concepts.- The exam generates reports indicating students' progress and areas needing improvement.- ASSET is conducted without any pre/post teaching business relation with the school and is part of the school's evaluation system.2. Applicant's Interpretation of Law:- The applicant claims that the services provided fall under the exemption specified in Sr. No. 66 of Not. No. 12/2017-CT (Rate) dated 28.06.2017, which exempts services relating to the conduct of examination by educational institutions.- They argue that their services are auxiliary to the educational institutions' examination processes and thus qualify for exemption.3. Definition and Scope of 'Educational Institution':- As per Notification No. 12/2017-Central Tax (Rate), 'educational institution' includes institutions providing education up to higher secondary school or equivalent.- The applicant's services are provided to schools that fall under this definition.4. Examination of Conditions for Exemption:- The recipient of the services must be an 'educational institution' as defined.- The services must relate to the conduct of examinations by such institutions.5. Analysis of ASSET Services:- ASSET services involve providing multiple-choice question papers (both physical and online) to schools, evaluating answers, and generating reports.- Schools use ASSET results as part of their examination and evaluation system, fulfilling the condition of services relating to the conduct of examinations.6. Judicial Precedents and Interpretations:- The term 'in relation to' has been interpreted broadly by the Supreme Court in various cases, suggesting a wide scope for services that assist educational institutions in conducting examinations.- Previous rulings by the Authority for Advance Rulings (AAR) in similar cases have held that services like printing question papers for educational institutions are exempt from GST.7. Conclusion:- The applicant’s services of providing ASSET examination tools to schools qualify for exemption under Sr. No. 66(b)(iv) of Not. No. 12/2017-CT (Rate) dated 28.06.2017.- The services are considered auxiliary to the conduct of examinations by educational institutions, meeting the criteria for GST exemption.Ruling:Whether the educational assessment examination (ASSET) with its variants provided by the applicant to school/educational organization is exempted from payment of GST under Sr. No. 66(b)(iv) of Not. No. 12/2017-CT (Rate) dated 28.06.2017 and entry No. 69(b)(iv) of Not. No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 as well as equivalent SGST NotificationRs.Answer: Yes, exemption is available in respect of ASSET services provided to educational institutions.