Transportation of School Students

[Rushab Jain]

We are running a business of transportation of school students. We had an formal agreement with the school that we will provided services of transportation of school students. However we do not receive any consideration from school nor we raise any invoice on school. Entire consideration is received from school students directly. Now my question is whether these services is taxable or exempt?

If it is taxable or exempt please specify under which head i.e service to educational institution or transport of passenger

[Ganeshan Kalyani]

The exemption notification states service supplied to educational institution by way of transportation of student. Hence in this query the querist supplies service to the student which satisfies the condition therefor the service is exempt. I go with the views of Sri Kasturi Sir.

[Ganeshan Kalyani]

Yes advance ruling would be a good solution to get the query solved.

[Rushab Jain]

Dear All,

Sorry for disturbing you all again.

However what will be GST Taxability if school who is insisting on issuing the Receipt in his name though Bank account belongs to us?

My opinion is that if this is the case then we are indirectly receiving money from school. Hence this is exempt.

PLease clarify if I am wrong.

[KASTURI SETHI]

I understand well that this is a hypothetical question. Anyhow it is to be replied. There is no dispute or doubt about exemption, if you receive your transportation charges from school via bank account.

[Shameem Ahmed]

There are two views expressed above. One is based on purposive interpretation and the other one is based on literal interpretation. In this case, a literal interpretation will defeat the very purpose of exemption. In my view, exemption call be very much availed. In order to avoid any litigation, the transporter can enter into a service agreement with the school for transport of its students and fixing the rate, but in the consideration clause, it can be mentioned that fee as per the agreed clause shall be collected directly from students and such payments made shall be treated as the payment by school.

AI Summary

Exemption for student transportation may hinge on whether students or schools are the service recipients; seek advance ruling.
Whether transportation of school students is subject to GST depends on whether the service is characterised as supplied to the educational institution (and therefore exempt) or to students/parents (and therefore taxable); where payments are received from students or parents, classification is uncertain, alternative concessional treatment for passenger transport may apply subject to input tax credit restrictions, and factual features such as invoicing, contractual party and payment routing are determinative, so an advance ruling is recommended.