Educational institution joint venture revenue share taxable at 18% GST as professional service

The AAR Kerala ruled on GST implications for an educational institution joint venture. The authority held that the applicant's share in revenue from the educational institution constitutes a taxable supply under GST at 18%, falling under "Other professional, technical and business service." The interest-free refundable deposit made by the applicant to the joint venture partner was deemed a supply but exempted from GST under relevant notifications. Questions regarding the joint venture partner's GST liability and student fee payments were ruled outside the scope of advance ruling as they didn't relate to the applicant's supply activities.

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Issues Involved:
1. Identification of the recipient of service in the proposed joint venture for both the applicant and Choice Estates and Constructions Pvt. Ltd. (CECPL).
2. GST liability on the amount paid by students to the educational institution.
3. GST liability on the applicant's share in revenue from the educational institution.
4. GST liability on CECPL's share in revenue from the educational institution.
5. GST liability on the interest-free refundable deposit proposed to be made by the applicant with CECPL.

Summary:

Issue 1: Recipient of Service in the Proposed Joint Venture
Question: Who would be the recipient of service vis-a-vis the applicant and CECPL in the proposed joint ventureRs.
Ruling: No ruling can be given as the question does not fall under the purview of any of the clauses of section 97(2) of the CGST/KSGST Act, 2017.

Issue 2: GST Liability on Amount Paid by Students
Question: Whether the amount paid by students to the educational institution proposed to be jointly operated by the applicant and CECPL would be liable to GSTRs.
Ruling: No ruling can be given since the question is not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

Issue 3: GST Liability on Applicant's Share in Revenue
Question: Whether the applicant's share in revenue from the educational institution would be liable to GSTRs.
Ruling: Yes, the service supplied by the applicant to the educational institution (the joint venture) is liable to Goods and Services Tax as per Notification No. 11/2017-Central Tax (Rate) dated 28/06/2017 and S.R.O 370/2017 dated 30/06/2017 of Government of Kerala.

Issue 4: GST Liability on CECPL's Share in Revenue
Question: Whether CECPL's share in revenue from the educational institution would be liable to GSTRs.
Ruling: No ruling can be given since the question is not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

Issue 5: GST Liability on Interest-Free Refundable Deposit
Question: Whether the interest-free refundable deposit proposed to be made by the applicant with CECPL would be liable to GSTRs.
Ruling: It constitutes a supply under the CGST/KSGST Act, 2017 but is exempted from GST as per Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 and S.R.O. No. 371/2017 dated 30/06/2017.

Discussion and Findings:
- The joint venture is recognized as a separate legal entity distinct from its constituent members.
- The applicant and CECPL are considered as providing input services to the joint venture, which in turn provides educational services to students.
- The revenue shared between the applicant and CECPL from the joint venture is considered as consideration for the services provided to the joint venture.
- The interest-free refundable deposit made by the applicant to CECPL is deemed a supply but is exempt from GST under the relevant notifications.

This judgment clarifies the GST implications on various aspects of the joint venture agreement between the applicant and CECPL for operating an educational institution.

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