2021 (7) TMI 809 - AAAR - GST

Appellate Authority Confirms GST on Educational Services & Supplies

In Re : M/s. Logic Management Training Institutes Pvt. Ltd.

The appellate authority upheld the Advance Ruling, confirming that the appellant's educational services, hostel fees, and sale of textbooks are subject to ... Liability of tax - hostel facility to its students including food - hostel fees collected from outside students staying at the hostel for study purpose at a rate of ₹ 250/- per day per person including food - tax liability on the appellant for selling text books to its students - educational institution in Para 2(y) of the N/N. 12/2017 Central Tax (rate) dated 28-06-2017 - exemption from GST or not - education as per the curriculum recognized by law - SAC of the services - collection of fees to Government university or institute working on the basis of Act passed in the Parliament - exemption given to hostel students as per Entry 14 of Notification No. 12/2017 - fixing tax on exempted goods like books - non-taxability of the services rendered by the appellant. HELD THAT:- In respect of exemption notification, and by applying the settled law of strict interpretation of taxing statute, which are plainly worded, as in the case in hand, the services rendered by the appellant are held to be not a service by way of ‘education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force’ as envisaged under no 66 of the said notification, for exemption from GST. Service accounting code of the services rendered by the appellant - HELD THAT:- As per the Scheme of classification of services under GST Law, SAC 999293 Specifies about commercial training and coaching services. This service code includes any training or coaching provided by any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the spots with or without issuance of a certificate and includes coaching or tutorial classes. Thereby the services rendered by the appellant can rightly be classified under the SAC. Whether there is any GST liability on the appellant for collecting and transferring examinations fees and other fees to the recognized institutes or universities on behalf of the students study at their institute? - HELD THAT:- As per the provisions of Section 15 of the CGST/SGST Act, 2017 the entire consideration received by the appellant from the recipient of services is taxable under GST. However, if the conditions prescribed in Rule 33 of the CGST Rules, 2017 are satisfied and the appellant acts as a pure agent on behalf of the students enrolled with them, there will be no tax liability for the amount collected as examination fees/other fees. Accordingly, such amount can be excluded from the value of taxable supply as expenditure incurred by the appellant as a pure agent of the recipient of services. Tax liability on Hostel Fees - appellant offers hostel facility to its students at a rate of less than ₹ 200/- per day per person including food and at a monthly rate of maximum ₹ 6000/- - HELD THAT:- The appellant is mainly and principally engaged in imparting training/coaching to their students and thereby providing educational services, which is classifiable under SAC 9992-999293. The student who opts to take coaching from them stays in their hostel and pay hostel fees @ less than ₹ 200 per day or maximum ₹ 6000/- per month, in addition to the course charges as a package. It is also undisputed that they are charging ₹ 250/- per day from outside students/residents staying at their hostel. It may be seen here that they are charging different rates from their students and outside persons possibly they differentiate between the two categories of residents. The students enrolled with them are presumably charged lesser amount of hostel fees as a part of the package with educational services. In such a situation, when the appellant are distinguishing the two types of residents for charging different hostel fees for the same lodging and food services, it is not difficult to infer that their students enjoy the concession only as a part of composite services of educational services and hostel facility - Having held that the hostel facility is being provided by the appellant to their enrolled students as a part of composite services along with educational service, the entire set of service shall be classified under SAC 9992-999293 – Commercial training and coaching services, being principal service and shall be charged to GST accordingly. The clam of the appellant regarding benefit of exemption notification no. 12/2017-CT for hostel fees is also devoid of merit in view of the fact that exemption is granted to the services falling under Sl. No. 14 – heading 9963 only and not for heading 9992 as is applicable in this case. Tax liability on the appellant for selling text books to its students - HELD THAT:- The supply of text book to students are again at different lower rate than that of outside persons, as is admitted by the appellant in their submissions. Hence, the supply of books or printed material relating to the course opted for them shall have to be treated as part of composite services along with educational services, being the principal service, as is held by us in case of hostel fees charged from the students. Consequently, the supply of books shall also be charged to rate of GST as applicable to educational service under SAC 9992-999293. Issues Involved:1. Exemption from GST for education programs and training.2. Service Accounting Code (SAC) classification.3. Tax liability on collecting and transferring examination fees.4. Tax liability on hostel fees.5. Tax liability on selling textbooks.Issue-wise Analysis:Issue Nos. 1, 2, and 3: Exemption from GST for Education Programs and TrainingThe appellant argued that their educational services should be exempt from GST as they provide lecture classes and notes based on syllabi published by government-recognized institutions. However, the appellate authority determined that the appellant's institution does not fit the definition of an 'educational institution' under Para 2(y) of Notification No. 12/2017-Central Tax (Rate), as they do not provide elementary education, education up to higher secondary, or vocational education. The appellant's services do not lead to qualifications recognized by law. Therefore, the services are not exempt from GST as per entry no. 66 of the Notification No. 12/2017-Central Tax (Rate).Issue No. 4: Service Accounting Code (SAC) ClassificationThe services provided by the appellant fall under 'SAC – 9992-999293 – Commercial training and coaching services' as per the Scheme of Classification of Services notified in Notification No. 11/2017-Central Tax (Rate).Issue No. 5: Tax Liability on Collecting and Transferring Examination FeesSection 15 of the CGST/SGST Act, 2017, specifies that the entire consideration received by the supplier is liable to GST. However, if the appellant acts as a 'pure agent' as per Rule 33 of the CGST Rules, 2017, the amount collected as examination fees can be excluded from the value of taxable supply.Issue No. 6: Tax Liability on Hostel FeesThe coaching/training provided by the appellant along with hostel facilities qualifies as a composite supply under Section 2(30) of the CGST Act, 2017. The principal supply being educational services, the entire supply falls under 'SAC-9992-999293 – Commercial training and coaching services' and is liable to GST at the rate applicable for the principal supply.Issue No. 7: Tax Liability on Selling TextbooksThe sale of textbooks to students is also considered a composite supply along with educational services. As per Section 8(a) of the CGST/SGST Act, 2017, the entire supply is treated as 'SAC-9992-999293 – Commercial training and coaching services' and is liable to GST at the rate applicable for the principal supply.Conclusion:The appellate authority upheld the Advance Ruling No. KER/76/2019, dated 20/5/2020, with modifications. The appeal filed by the appellant was rejected, confirming that the educational services, hostel fees, and sale of textbooks provided by the appellant are subject to GST.