Coaching services with student kits deemed composite supply as goods are integral and cannot be separated from education services.

The AAAR Rajasthan ruled that coaching services provided with student kits (printed materials, uniforms, bags) constitutes composite supply rather than mixed supply. The authority determined that student kits are integral to coaching services and cannot be separated, as removal would affect students' studies. Since the goods form a small proportion of total value, are not sold separately, and students cannot opt for coaching without receiving the kit, the principal supply is coaching services with goods being ancillary components of the composite supply package.

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Issues Involved:
1. Classification of supply as either "mixed supply" or "composite supply".
2. Eligibility of Input Tax Credit (ITC) for the supplies.
3. Determination of the supplier and recipient of coaching services.
4. Value of services provided by the appellant and the channel/network partner.

Summary:

1. Classification of Supply:
The appellant, M/s Resonance Edventures Limited, provides coaching services along with goods such as printed materials, uniforms, and bags. The Authority for Advance Ruling (AAR), Rajasthan, initially classified this as a "mixed supply" under Section 2(74) of the CGST Act, 2017, attracting the highest rate of tax at 18%. However, the appellant argued that the supply should be considered a "composite supply" under Section 2(30) of the CGST Act, 2017, with coaching services as the principal supply. The Appellate Authority noted that the appellant's services and goods are naturally bundled and integral to the coaching services, thus qualifying as a "composite supply". The ruling of the AAR was modified to classify the supply as a "composite supply" with coaching services as the principal supply.

2. Eligibility of Input Tax Credit (ITC):
The AAR confirmed that the appellant is eligible to avail Input Tax Credit (ITC) as per Section 16 of the CGST Act, 2017, for the GST paid on goods or services used in the course or furtherance of business, subject to the conditions prescribed under Section 17 of the CGST Act, 2017.

3. Determination of Supplier and Recipient:
The AAR ruled that the appellant (REL) is the supplier of mixed supply to the students, and the network partner is the supplier of service to the appellant. The place of supply for both cases would be determined as per the relevant sections of the IGST Act, 2017.

4. Value of Services:
The total consolidated amount charged by the appellant to the students, for which a tax invoice is issued, shall be the value of the mixed supply. The network partner will issue invoices to the appellant for the coaching services provided.

Conclusion:
The Appellate Authority concluded that the supply of coaching services along with goods by the appellant is a "composite supply" with coaching services as the principal supply, modifying the initial ruling by the AAR. The appellant is eligible for ITC, and the value of services will be based on the total consolidated amount charged to students.

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