Delhi HC rules educational institution qualifies for GST exemption on NEET exams and DNB/FNB courses under Paragraph 3(iv)

Delhi HC held that the petitioner qualified as an educational institution for GST exemption purposes regarding NEET examinations and DNB/FNB courses. The court ruled that Paragraph 3(iv) of the 2017 Notification clarified that educational boards conducting examinations are exempt from GST, applying retrospectively. For DNB/FNB courses, despite no classroom teaching, the structured curriculum and enrolled students established the petitioner as an educational institution. However, screening tests and medical institution accreditation services remained taxable as they fell outside exemption scope. The refund rejection orders were set aside and remanded for fresh consideration.

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Issues Involved:
1. Refund of GST paid by the petitioner for the period April 2020 to August 2020.
2. Validity of Circular No. 151/07/2021-GST dated 17.06.2021.
3. Classification of services provided by the petitioner and their taxability under GST.

Summary:

Issue 1: Refund of GST Paid by the Petitioner
The petitioner challenged the rejection of their refund claims for GST paid between April 2020 and August 2020, arguing that the tax was paid under a mistaken understanding of the law. The court examined whether the services provided by the petitioner were chargeable to GST during this period.

Issue 2: Validity of Circular No. 151/07/2021-GST
The petitioner also contested Circular No. 151/07/2021-GST, which clarified that Central and State Educational Boards are educational institutions for conducting examinations, thus exempt from GST. However, other services like accreditation were chargeable at 18%. The court found that the circular was not exhaustive and did not amend the 2017 Notification but merely clarified it. The court rejected the contention that the circular introduced a substantive exemption prospectively.

Issue 3: Classification of Services and Taxability
The court classified the services provided by the petitioner into four categories:
1. Conduct of NEET Examinations: The court held that NEET examinations are entrance examinations and are exempt from GST under Serial No. 66(aa) of the 2017 Notification from 25.01.2018.
2. Grant of Qualifications (DNB and FNB): The court found that the petitioner is an educational institution for the purposes of DNB and FNB courses, and services related to these qualifications are exempt from GST under Serial No. 66(a) of the 2017 Notification.
3. Conduct of Screening Tests: The court held that screening tests are not part of the curriculum and are not entrance examinations, thus not exempt from GST.
4. Accreditation Services: The court concluded that accreditation services are not exempt from GST as they do not fall within the scope of services provided to students, faculty, or staff.

Conclusion:
The court set aside the orders rejecting the petitioner's refund applications and remanded the matter to the appropriate authority for reconsideration in light of the court's observations. The petition was disposed of accordingly.

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