GST on Extra Classes, Goods and Services Tax - GST

[Rajesh Kumar]

Respected experts,

As per para No. 2.1 of Circular No. 85/04/2019 dated 01.01.2019,wherein it has been mentioned that

Supply of all services by an educational institution to its students, staff and faculty is exempt under Notification No. 12/2017- CTR dated 28.06.2017 Sr. No. 66.

1. Please guide whether all services cover preparation of NDA, IIT, PMT various competitive entrance exam etc. on additional consideration or these activities are taxable.

2. Whether extra classes provided by schools after school hours are taxable or exempted ?

3. Whether the supplies done by school other than education like sale of bus, furniture or other school articles are taxable under gst?

Posts / Replies

[Shilpi Jain]

ANY services provided to ITS STUDENTS by the educational institution will be exempt. So competitive exams coaching imparted to them by school and extra classes will be exempt as well.

Sale of other articles would be liable to GST. You should explore other ways of working in this scenario to see that these kind of one off transactions do not attract the requirement of registration.

[Rajesh Kumar]

Ma’am

What is an Educational Institution under GST?

Under GST, “educational institution” is defined as an institution providing services by way of:

• Pre-school education and education up to higher secondary school or equivalent;
• Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
• Education as a part of an approved vocational education course;

As per above definition, if school provides education other than ‘Pre-school education and education up to higher secondary school or equivalent; Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force; at that portion, school will not be educational institutions.

Further, if school is not educational institution for this portion, no exemption is allowed.

Therefore, I think GST is applicable on imparting education for extra consideration other than supplies defined in definition.

Otherwise, there will be no difference between schools and coaching centers.

[Amit Agrawal]

In my view, exemption from GST is not available for additional services provided (i.e. preparation of NDA, IIT, PMT various competitive entrance exam etc.) at separate consideration.

Any exemption notification needs to be interpreted strictly and where two views are possible, interpretation benefitting the revenue will be upheld and not the interpretation benefitting the person claiming exemption.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Rajesh Kumar]

Sir/ Madam,

Both views are contrary to one another. Guidance from other experts required, please.

Regards

[Padmanathan Kollengode]

Dear Rajesh,

I concur with the views of Shilpi Ma'am. You have to look at two things here only - whether the institution is an 'education institution' or not? and whether the service is provided to 'ITS students, staff and faculty' or not? if the answer to both these questions are yes, then 'ALL service' provided by it shall be exempt in my humble opinion.

So, the answer to Question 1 and 2 depends upon whether the services are provided to students of the educational institution or outsiders.

Regarding sale of bus, furniture and other school articles, it shall be taxable as the exemption is only applicable for services and not to goods.

[Shilpi Jain]

Also note that strict interpretation of exemption notifications is not the thumb rule.

While checking whether te subject falls withing the exemption strict interpretation Is required. Then it should be a liberal interpretation of the conditions and procedures, see decision in the case of Mother Superior case

Also if you look at various high court decisions under service you will note that this entry for educational institution has been most liberally interpreted.

[Rajesh Kumar]

Respected Sir & Ma’am

The instant matter is of a school that gives education from pre-primary to 12th standard.
Therefore, first condition or requirement to be an educational institution is fulfilled.

Secondly, it covers institutions providing services by way of education as a part of curriculum for obtaining a qualification recognised by any law for the time being in force.

Now, issue is this school also provides preparation of NDA, IIT, PMT various competitive entrance exam etc. on additional consideration to its students. This additional preparation service is not education as a part of curriculum for obtaining a qualification recognised by any law for the time being in force.

Therefore, to this extent of additional preparation, the said school is not a educational institution.
Further, the minimum qualification for NDA, IIT, PMT & various competitive entrance exam is 12th pass. In this way also, school is not providing education upto higher secondary school.

Accordingly, in my view, GST is payble to that portion which is not covered in the definition of educational institutions.

Humble opinions please.

[Padmanathan Kollengode]

Mr. Rajesh, in my humble opinion once the requirement of educational institution is satisfied, the requirement of curriculam need not be seen qua each services.

If the intention was to provide exemption to only those services which are within curriculam, what is the relevance of "ALL services"?

Thus, in my humble opinion it is exempt. I respect contrary views.

[Amit Agrawal]

In continuation of my post at serial No. 3 above, I wish to elaborate my thought-process as follows:

A. Even though the querist has used the wordings 'Supply of all services by an educational institution to its students, staff and faculty is exempt ......' in his query, there is no such word as 'all' which is used in Entry at Serial no. 66 (a) of referred notification. Be that as it is.

B. Said wordings of Entry at Serial no. 66 (a) are as follows: "Services provided by an educational institution to its students, faculty and staff"

C. The definition of 'Educational Institution', as given in very same exemption notification under discussion here, reads as follows:

“educational institution” means an institution providing services by way of,- (i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course;

D. Please note that exact wordings in the definition i.e. means an institution providing services by way of ............, which is specific definition, strictly defining when should an institution would be called as 'Educational Institution' for subject notification.

E. In my humble view, ONLY WHEN an institution providing services by way of one of three specified types of education, it can be called as 'Education Institution' for the purpose of claiming exemption against Entry at Serial no. 66 (a) of referred notification. And hence, such 'Education Institutional' are exempted from paying GST while providing services by way of one of three specified types of education.

F. On the contrary, if an institution providing services other than by way of one of three specified types of education, it can NOT be called as 'Education Institution' at-all for the purpose of claiming exemption against Entry at Serial no. 66 (a) of referred notification. And hence, in my humble view, such 'Institution' are NOT exempted from paying GST while providing services other than by way of one of three specified types of education (i.e. against Entry at Serial no. 66 (a) under discussion here).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. And I respect contrary views.

[Rajesh Kumar]

Amit sir,

Supply of all services by an educational institution to its students, staff and faculty is exempt ......' is mentioned in para No. 2.1 of Circular No. 85/04/2019 dated 01.01.2019.

This ‘all’ is creating confusion. However in basis notification, it is not mentioned.

As per definition of Educational Institution, there are three points with using ‘by way of’ word.

Does it mean, all three points must be covered to be a educational institution or only one out of three sufficient ?

[Amit Agrawal]

Kindly note that said Circular No. 85/04/2019 dated 01.01.2019 is not even issued using powers of Section 168.

Anyway, if 'all' services were exempted, there was no need to amend said entry though said circular itself talks about various amendments carried.

Hypothetically speaking, if such institution starts suppling non-education services (i.e. services which got no connection with education services per se) such as say, management or finance or tax consultancy to students / staff / faculty, does that mean that 'all' such non-connected services are also exempt (when provided to students / staff / faculty) even if they got nothing to do with 'education' at all? In my view, such interpretation is not tenable.

As stated in explanation 3 (ii) to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 Chapter, Section, Heading, Group or Service Codes mentioned in column (2) of the table in Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 are only indicative. But, that does not mean that they are 'irrelevant' for purpose of interpreting the said notification.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. And I respect contrary views.

[Amit Agrawal]

In the context under discussion here, one should also not ignore importance of the word 'its' in Entry at Serial no. 66 (a) (i.e. Services provided by an educational institution to its students, faculty and staff).

One needs to read definition of 'Education Institution' (i.e. an institution providing services by way of one of three specified types of education) and then, link the same to exemption-entry (i.e. Services provided by an educational institution to its students ....).

The words 'Its student' re-enforces the fact that these are 'students of one of three specified types of education' provided by such 'educational institution'.

When 'Education Institution' (i.e. an institution providing services by way of one of three specified types of education) starts offering 'additional / optional / independent courses' such as preparation of NDA, IIT, PMT various competitive entrance exam etc. at separate consideration, such additional / optional / independent courses' are not provided by an educational institution to its students (as defined in subject notification). And hence, same not exempted vide Entry no. 66 in my humble view.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. And I respect contrary views.

[Rajesh Kumar]

Dear Experts,

On perusal above replies, final conclusion appears that When 'Education Institution' starts offering 'additional / optional / independent courses' such as preparation of NDA, IIT, PMT various competitive entrance exam etc. at separate consideration, such additional / optional / independent courses' are not provided by an educational institution to its students). And hence, same not exempted vide Entry no. 66.

If all are not agree, please suggest exact solution of the query.

[Amit Agrawal]

Dear Shri Rajesh Kumar Ji,

You got two views - contrary to each other - both explaining own rationale. And there is always possibility that there can be third / many more arguments and finer points of defence etc.

Moreover, eventual outcome of such cases also depend upon type of case put up by Dept. and defence/s put there-against by the assessee.

This is a discussion forum (& not a court which can pronounce its views by way of a verdict, which itself can further be challenged till Supreme Court ... by both sides).

Hence, in my humble view, one should not expect a 'final conclusion' for such complex issues (more so on public platform like this) and same will be eventually decided one way or other by courts ..... probably Apex Court.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. And I respect contrary views.

[Padmanathan Kollengode]

Rajesh Sir,

I agree with Ld. Amit Ji. The discussion in this forum only throws light on different views on the issue on hand. There is no conclusive view here. You may kindly analyse the outcomes of different views and take a call.