Educational services GST exemption disputed for sub-contracted pre and post examination services to boards and universities

The AAR Telangana was unable to reach a uniform decision regarding GST exemption for pre and post examination services provided to Educational Boards and Universities through sub-contracting arrangements. The applicant company provides these services to a main contractor who then supplies them to educational institutions. Since the Central Tax and State Tax members expressed differing views on whether the exemption applies to sub-contracted services, the matter was referred to the Appellate Authority for Advance Ruling under Section 98(5) of the CGST/TGST Act, 2017.

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Issues Involved:
1. Applicability of GST exemption on pre and post-examination services provided to Educational Boards and Universities.
2. Applicability of GST exemption on pre and post-examination services provided on a sub-contract basis.

Detailed Analysis:

Issue 1: Applicability of GST exemption on pre and post-examination services provided to Educational Boards and Universities

The applicant, engaged in providing pre and post-examination services to various Educational Boards and Universities, sought clarification on whether these services are exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The services include data processing, results preparation, and generation of statistical data and reports.

Legal Interpretation:
- Notification No. 12/2017-Central Tax (Rate): This notification exempts services provided to an educational institution relating to admission to, or conduct of examination by, such institution under Sl. No. 66(b)(iv).
- Definition of Educational Institution: As per the notification, an educational institution includes institutions providing education up to higher secondary school, education as part of a curriculum for obtaining a qualification recognized by law, and approved vocational education courses.
- Explanation (iv): Clarifies that Central and State Educational Boards are treated as educational institutions for the purpose of providing services by way of conduct of examination to the students.

Judgment:
- The services provided by the applicant to State Educational Boards and Universities qualify for GST exemption as they relate to the conduct of examinations by these institutions.
- The applicant's services fall under Sl. No. 66(b)(iv) of the notification, making them eligible for exemption from GST.

Issue 2: Applicability of GST exemption on pre and post-examination services provided on a sub-contract basis

The applicant also sought clarification on whether the GST exemption would still apply if the services are provided on a sub-contract basis to a main contractor who, in turn, provides these services to Educational Boards and Universities.

Legal Interpretation:
- Circular No. 151/07/2021-GST: Clarifies that GST is exempt on input services relating to admission to, or conduct of examination, such as online testing service, result publication, and printing of notification for examination when provided to educational institutions.
- Notification No. 12/2017-Central Tax (Rate): The entry specifies that services must be provided directly to educational institutions to qualify for the exemption.

Judgment:
- State Tax Member's View: The exemption can be claimed by any taxable person, including a sub-contractor, as long as the services are related to the conduct of examination by the educational institution.
- Central Tax Member's View: The main contractor does not fall under the definition of an educational institution, and therefore, the exemption is not available to the sub-contractor.

Conclusion:
- There is a divergence of opinion between the State Tax and Central Tax Members regarding the applicability of GST exemption on services provided on a sub-contract basis.
- Consequently, the application has been referred to the Appellate Authority for Advance Ruling for a definitive decision on this issue.

Final Rulings:
1. GST exemption is applicable to the applicant for pre and post-examination services provided to Educational Boards and Universities.
2. The decision on the applicability of GST exemption for services provided on a sub-contract basis has been referred to the Appellate Authority due to differing opinions among the Members.

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