School transport exemption denied where parents paid directly and service was not supplied to an educational institution.

Transportation services arranged with schools but billed and paid directly by parents were treated as taxable transport services, not exempt educational services. The AAAR noted that the school did not supply the service, did not receive it in the relevant legal sense, and did not bear the consideration; the agreements with schools were mainly regulatory arrangements to comply with bus rules. Because the exemption for transportation linked to an educational institution is strictly construed, the entry was found inapplicable where the service was neither provided by nor to an educational institution. The exemption was therefore denied.

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Issues: Whether transportation services provided by the appellant to school students and staff, under arrangements with schools but with charges collected directly from parents, are services provided to an educational institution and therefore exempt under Serial No. 66 of Notification No. 12/2017-Central Tax (Rate).

Analysis: The service was supplied by the appellant as a transportation service for consideration, and the consideration was paid by the parents of the students. The legal definitions of service, supplier, recipient and consideration show that where consideration is payable, the person liable to pay it is the recipient. On the facts, the school did not render the service, did not receive the service in the relevant sense, and did not pay the consideration. The agreements with schools were found to be general in nature and entered into to comply with school bus regulations, while the receipts showed direct collection of transport fees from students with GST. The exemption entry applies only to services provided by an educational institution or to an educational institution by way of transportation of students, faculty and staff, and exemption notifications are to be strictly construed.

Conclusion: The transportation service was neither provided by an educational institution nor provided to an educational institution, so the exemption was unavailable and the appeal failed.

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