2023 (7) TMI 755 - AAR - GST

Gurukul residential school denied GST exemption for failing charitable activities and educational institution criteria under section 12AB

AAR Karnataka ruled that the applicant's gurukul-style residential school was not exempt from GST. The school, though registered under section 12AB of ... Exemption form GST - Education being provided by the applicant - Charitable institution or not - Entry No. 57 of Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017 - HELD THAT:- As per entry 1 of the Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017, exemption is given only if the following conditions are satisfied.- i. The entity providing services should be registered under section 12AA or 12AB of the Income-tax Act, 1961; ii. And the services provided by that entity should be by way of 'charitable activities'. The Applicant has stated that they are registered under section 12AB of the Income-Tax Act 1961 and they have submitted a copy of order for registration in Form No. 10AC supporting the same. Thus the Applicant has satisfied the first condition. The Applicant has stated that Isha Samskriti' is a gurukul style of residential school where subjects like Sanskrit and English language, Indian classical music (Carnatic and Hindustani), Indian classical dance( Bharatnatyam and other forms), Kalaripayattu, Yoga and basic arithmetic are taught and also extracurricular activities including football, volleyball and treks. They are just teaching these subjects as any other subjects in any normal residential schools but with a difference that the subjects taught here are not the same - Applicant also states that once the student completes 10 years of education (or till they attain 18 years), they can become professional dancers, musicians or yoga/kalaripayat teachers, but does not talk anything about being spiritual. In view of the above, it is observed that the Applicant is not providing any services relating to advancement of religion, spirituality and yoga. Hence, the Applicant has failed to prove that the services provided by them through 'Isha Samskriti', a gurukul style of residential school does not qualify to be 'charitable activities' as defined in the notification and therefore not eligible to claim exemption as per entry 1 of the Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017. Whether the Education provided by the applicant is exempt under Entry No. 57 of Notification No.9/2017-Integrated Tax (Rate) dated 28th June 2017? - HELD THAT:- The Applicant states that 'Isha Samskriti' is a residential school with its own curriculum which is in line with Bharatiya tradition of gurukulas. The Applicant is neither providing pre-school education nor education up to higher secondary school and they are following their own curriculum. In view of the above the Applicant is not covered under the definition of “educational institution” as per Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017 and hence cannot claim exemption as per entry no. 69 of the same notification. Issues Involved:1. Whether the education provided by the applicant is exempt under Entry No. 57 (later corrected to Entry No. 69) of Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017.2. Whether the service is exempt under any other notification.Summary:Issue 1: Exemption under Entry No. 69 of Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017The applicant, a Public Charitable Trust engaged in promoting education, yoga, meditation, and other charitable objectives, sought an advance ruling on whether the education provided by 'Isha Samskriti,' a gurukul style of residential school, is exempt under Entry No. 69 of Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017. The applicant argued that their activities fall under 'charitable activities' as defined in the notification, focusing on the advancement of spirituality and yoga.The Authority examined the conditions for exemption under Entry No. 69, which requires the entity to be an 'educational institution' providing services by way of:1. Pre-school education and education up to higher secondary school or equivalent.2. Education as part of a curriculum for obtaining a qualification recognized by any law.3. Education as part of an approved vocational education course.The Authority found that the applicant's institution does not provide pre-school or higher secondary education and follows its own curriculum, which is not recognized by any law. Therefore, it does not qualify as an 'educational institution' under the notification and cannot claim exemption under Entry No. 69.Issue 2: Exemption under any other notificationThe applicant also sought exemption under Entry No. 1 of Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017, which exempts services by entities registered under section 12AA or 12AB of the Income-tax Act, 1961, by way of charitable activities, including the advancement of religion, spirituality, or yoga.The Authority examined whether the applicant's activities qualify as 'charitable activities' under this notification. While the applicant is registered under section 12AB of the Income-Tax Act, the Authority found that the primary objective of the trust, as stated in its trust deed, does not explicitly mention the advancement of religion or spirituality. The activities of 'Isha Samskriti' were found to be similar to those of any other residential school, focusing on subjects like Sanskrit, English, Indian classical music and dance, Kalaripayattu, Yoga, and basic arithmetic, without a specific emphasis on spirituality.Therefore, the Authority concluded that the services provided by the applicant do not qualify as 'charitable activities' as defined in the notification and are not eligible for exemption.Ruling:1. The education provided by the applicant is not exempt under Entry No. 69 of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017.2. The service provided by the applicant through 'Isha Samskriti' is not exempt under any other notification.