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2024 (5) TMI 177 - HC - GSTBenefit of exemption from GST - educational institution or not - Rejection of refund of the Goods and Services Tax (GST) in respect of the part of the Financial Year 2020-21 April 2020 to August 2020 - tax paid under a mistaken understanding of the law - contradiction between Circular No. 151/07/2021-GST dated 17.06.2021 and N/N. 12/2017 Central Tax (Rate) dated 28.06.2017 - scope of examination of services in terms of the 2017 Notification. Scope of examination of services in terms of the 2017 Notification - whether the provision of any services is exempted (chargeable at Nil rate) from payment of GST? - National Eligibility-cum-Entrance Test (NEET) for admission to any medical institution in India - Degrees of Diploma of National Board (DNB) and Fellow of National Board (FNB) after conducting the examination - Conducts Screening Tests - Accreditation of Medical Institutions. NEET EXAMINATION - HELD THAT - The question whether the petitioner is an educational institution for the purposes of Clause (aa) of Serial No. 66 of 2017 Notification was expressly clarified by introduction of Clause (iv) in Paragraph 3 of the 2017 Notification. The said explanation clarified that the Central and the State Educational Boards would be treated as educational institutions for the limited purposes of providing services by way of conduct of examination to the students. The opening words of Paragraph 3(iv) of the 2017 Notification are for removal of doubts . The said Explanation is clearly clarificatory. The question whether educational boards are to be exempted from services provided in conduct of examination was considered by the GST Council at its 28th Meeting held on 21.07.2018. The Fitment Committee had noted that the definition of educational institutions as contained in Paragraph 2(y) of the 2017 Notification did not cover State Educational Boards Central Government Boards and autonomous organizations responsible for administration of education in India - Most of the State Boards and Central Boards were either boards set up by the Act of Parliament or State Legislatures or registered under the Societies Registration Act 1860. Therefore all examination boards except a few were Government entities. Any grant received by educational boards for providing services to government or any other person was also exempt. Undisputedly the question whether a provision is clarificatory or declaratory would not be dispositive of the question whether the same is applicable retrospectively. However the fact that the language of the statute clearly reflects that it is for removal of doubts and to clarify doubts is a relevant indicator to determine whether the provision in fact intended to clarify and not intended to bring a prospective change. It is also relevant to determine whether the pre-amended law would admit such a clarification. The service of holding an examination for aspirants to medical colleges to provide a standard basis for entrance in medical institutions the same would not fall within the ambit of Serial No. 66(a) of the 2017 Notification as the same covers services provided by an educational institution to its students faculty and staff. The candidates appearing for NEET examination are not students of the petitioner - More importantly the Central Government has introduced a separate entry for exempting the services provided by an entrance examination at Serial No. 66(a) of the 2017 Notification. Since NEET examinations are in the nature of an entrance examination the petitioner would be entitled to the benefit of an exemption by virtue of Serial No. 66(aa) of the 2017 Notification which came into effect on 25.01.2018. DEGREES OF DIPLOMATE OF NATIONAL BOARD (DNB) AND FELLOW OF NATIONAL BOARD (FNB) - HELD THAT - Undeniably the State Boards and educational boards are educational institutions. In the case of Secondary Board of Education Orissa v. Income Tax Officer Ward E Cuttack 1972 (1) TMI 16 - ORISSA HIGH COURT the Orissa High Court had observed that the Board of Secondary Education is not a university but it is indisputably an educational institution. Education is included within the definition of charitable purpose under Section 2(15) of the Income Tax Act 1961 and the said expression has been read in an expansive manner. The course of DNB and FNB is a structured course. Although the students conduct their training with accredited medical institutions the course is structured and managed by the petitioner. There is also no doubt that the students undergoing the said course are enrolled with the petitioner. Thus although there is no classroom teaching by the petitioner; it is undoubtedly involved in imparting education to the students enrolled with it as a part of a curriculum. The course fee collected by the petitioner is forwarded to various accredited hospitals - for the purposes of DNB and FNB courses and conduct of Fellow Entrance Examinations DNB-PDCET exam FAT DNB and FNB final examination (theory and practical) and the Fellowship Exit Exam the petitioner clearly falls within the scope of an educational institution imparting education to students enrolled with it as a part of a curriculum. There can be no dispute that no GST is chargeable in respect of the services rendered by the petitioner in connection with DNB and FNB courses. The petitioner is indisputably involved in conduct of DNB and FNB courses and therefore squarely falls within the definition of an educational institution in respect of the services rendered to its students in connection with and as a part the said courses. SCREENING TEST AND ACCREDITATION OF MEDICAL INSTITUTIONS - HELD THAT - The services provided by the petitioner for conducting screening test and the fees charged for accrediting medical institutions does not fall within the scope of Serial No. 66(a) and Serial No. 66(aa) of the 2017 Notification - The screening tests are not conducted as a part of the curriculum. The said tests are also not in the nature of entrance examinations but are for the purposes of recognising primary medical qualifications secured by candidates from institutions abroad. The accreditation fee is charged from medical institutions for accrediting them. These services are also not covered under the relevant entries of the 2017 Notification. The candidates appearing for the screening tests are not students of the petitioner. Thus the petitioner s contention that it is exempt from payment of GST in respect of such services is unmerited. The orders rejecting the petitioner s application for refund which are impugned in this petition are set aside. The matter is remanded to the appropriate authority for considering afresh - Petition disposed off by way of remand.
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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