SAC Code and GST Rate on Commission/Fee in respect of Integrated Courses

[Mith Moh]

ABC acts as an NSDC-affiliated Training Partner and provides practical/vocational training for the universities' approved UG and PG programmes, conducts classes at its own premises through its in-house faculty, maintains the required training and IT infrastructure and study materials at its own cost, and also provides admission support, marketing, and placement assistance. The universities remain responsible for regulatory approvals, academic administration, conduct of examinations, convocation, and award of degrees, and collect the entire tuition fee directly from the students. ABC does not collect any fee directly from the students or admit students on behalf of the universities.

For the above services, the universities pay ABC a commission/fee, computed as an agreed percentage of the net tuition fees collected from the students. The commission/fee is payable only in respect of active students who appear for the examinations, and ABC raises monthly invoices on the respective universities for the same.

In the above factual scenario, under which six-digit Service Accounting Code (SAC) are the services supplied by ABC to the universities classifiable for the purposes of GST?

In my view, ABC provides faculty-led instruction along with the classroom infrastructure and administrative support. ABC retains complete control over its faculty, infrastructure and administration, to deliver the prescribed university curriculum. The principal supply is therefore educational instruction.

Accordingly, the composite supply should be classified under Heading 9992 (Education Services) and not under business support services. SAC 999293 is inapplicable as it covers commercial coaching provided, whereas the recipient here is the university. SAC 999294 is also excluded since the Explanatory Notes exclude higher education services comparable to the regular education system. Hence, the most appropriate classification, in my view, is SAC 999249 - Other higher education services.

AI Summary

Educational instruction classification under GST favours higher education services for university-linked integrated training programmes. Classification under GST of commission or fee paid by universities to an NSDC-affiliated training partner for integrated UG and PG vocational programmes turns on the nature of the composite supply. The stated view is that the principal supply is educational instruction, so the service should be classified under Heading 9992, Education Services, rather than business support services. On that analysis, SAC 999293 is treated as inapplicable, SAC 999294 is also treated as excluded, and the suggested classification is SAC 999249, Other higher education services.