TMI Blog2023 (12) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... printed material, it is not difficult to infer that their students enjoy these goods only as a part of composite services of educational/coaching services. No student would choose only the student kit and not the coaching. Here the AAR judgement fails prima facie, because the students cannot opt for only coaching service without receiving the student kit. The students will only pay for principal supply and anyways are going to receive the student kit. The student kit is part of the package of the coaching services and is not sold separately by the appellant or even by their network/channel partner. It is therefore to be treated as composite supply. The supply of coaching service by the appellant along with supply of goods/printed material/test papers, uniform, bags and other goods to their students is composite supply and their principal supply is coaching services. - SH. MAHENDRA RANGA, AND DR. RAVI KUMAR SURPUR, MEMBER Present for the Appellant : Shri Sanjiv Agarwal, CA, Shri Saurabh Agarwal, CA At the outset, we note that the provisions of both the Central Goods and Services Tax Act, 2017 and the Rajasthan Goods and Services Tax Act, 2017 are same barring a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d education to the students. 5. Students enrolled with the appellant are charged a lump-sum consolidated amount which is inclusive of the supply of goods and/or services, i.e., service of coaching and supply of goods like bag, uniform etc. 6. The appellant raise tax invoice on the students who wish to enroll with them for coaching services. 7. The Network Partner is under obligation to carry out/conduct course classes offered by the appellant at its premises for the students enrolled with the appellant (REL). 8. The Network Partner is required to engage qualified, experienced and competent faculty for teaching the courses offered by the appellant. 9. Fees collected from the students will be deposited in an agreed Escrow account with a bank. 10. For subject coaching services provided to the appellant, the Network Partner will issue invoices of coaching charges to the appellant for the services provided. 11. The salient features of the agreement are as follows: A. Obligations of Channel / Network Partner: (i) Conducting courses offered by appellant at its premises for registered students of appellant as per guidelines of appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the students who wish to enroll with Resonance Eduventures Limited (REL), for a consolidated amount (which includes coaching services and other related goods such as bag, uniform, books etc) which may be collected by the network partner and deposit the same in the escrow bank account. D. The Channel / Network Partner is required to collect all fees from the registered students in timely manner and deposit it in the designated Escrow bank account as per agreement. Such account shall be operated as decided in the agreement. E. Channel/Network Partner shall raise tax invoice for service charge to the appellant for coaching services (and managerial/ business/other related ancillary services) in relation to various offline/online Courses of the appellant (REL). 4.3 The appellant moved an application seeking advance ruling from the Authority for Advance Ruling. Rajasthan for issuance of Ruling on different questions. The Authority for Advance Ruling, Rajasthan vide order No. RAJ /AAR / 2021-221 35 dated 28.12.2021 pronounced following Ruling :- Q.1: Applicant is supplying services of coaching to students which also includes along with coaching, supply of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the respective arrangement under section 15 of the CGST Act, 2017. Q.5: Whether the Applicant (REL) shall be eligible to avail Input Tax Credit (ITC) for the supplies? Ans . Yes, as per Section 16 of the CGST Act, 2017, the applicant shall be eligible to take ITC of the GST paid on goods or services used or intended to be used in the course or furtherance of business subject to the conditions as prescribed and the provisions of the Section 17 of the CGST Act, 2017. 5. Aggrieved by the Ruling, the appellant has filed an appeal before this Authority on following grounds: Grounds of Appeal 5.1 That the impugned Advance Ruling has misinterpreted the contract of services as per facts and held the subject service of coaching to be the case of mixed supply as defined in 2(74) and not as composite supply as defined under section 2(30) of the CGST Act, 2017. The learned authority has failed to understand and interpret the nature of contract and services involved therein. 5.2 That the authority has grossly erred in following the settled law of binding precedence by not following its own advance ruling pronounced in the case of M/s Symmetric Infrastru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record especially the Appeal papers filed by the appellant, the Ruling of the AAR, Rajasthan, written as well as oral submissions made by the authorized representative(s) of the appellant at the time of personal hearing held on 11.10.2023. 7.1 On perusal of the appeal memo, we find that the appellant is aggrieved only by that part of the Ruling which has been pronounced against question No. 2, holding that the supply is a mixed supply of goods as well as services under Section 2(74) of GST Act, 2017 and attracts highest rate of tax. The AAR found that the applicant along with coaching services provides goods in the form of uniforms, bags, umbrellas, study material etc. These goods and services can be supplied separately and are not dependent on any other. Thus, the Supply in question shall qualify as mixed supply . Further, it is clear that there are supplies of goods as well as services of various classification (i.e. HSN/SAC) having various tax rates which constitutes the predominant element of a mixed supply. Thus, in the present case, the supply is a mixed supply of goods as well as services and attracts highest rate of tax is 18% (9% CGST + 9% SGST or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only if it is not a composite supply. As a corollary it can be said that if the transaction consists of supplies not naturally bundled in the ordinary course of business, the it would be a mixed supply, classified in terms of a supply of goods or services attracting the highest rate of tax. 7.5 We further note that as per Section 2(30) of CGST Act. 2017 composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration . - Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; In the above illustration, it is obvious that the packing material or the insurance cannot be supplied separately, if there is no supply of goods. As such, for the transportation of goods, the supply of packing material and the insurance is a composite supply, wherein the supply of goods is a principal supply. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gory. 7.8.1 We find that the answer to the question whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices being followed in the area of business to which the services relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below : I. The perception of the customer or the service receiver. If large number of service receivers of such bundle of services reasonably expect such services to be provided as a package then such a package could be treated as naturally bundled in the ordinary course of business. II. If majority of service providers in a particular area of business provide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines. III. The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in nature of incidental or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pers or course planner and only coaching would definitely affect the studies of the students) and furthermore the nature of the ancillary services/goods in this package is facilitative to the students as well. 7.10 We are of the view that the amount of the printed material, uniform and bags form a small proportion of the total value of the supply as part of the package. Moreover, when the appellant is not separately selling their bags, uniforms and printed material, it is not difficult to infer that their students enjoy these goods only as a part of composite services of educational/coaching services. 7.11 We find that it is beyond any doubt that the appellant s principal supply among the combined supplies, is coaching. which is undoubtedly taxable and admitted by the appellant also. The other goods i.e. student kit which includes study/printed material. bags, uniforms are ancillary and incidental to the coaching services No student would choose only the student kit and not the coaching. Here the AAR judgement fails prima facie, because the students cannot opt for only coaching service without receiving the student kit. The students will only pay for principal supply and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books, stationery, drawing material, sports goods, foods items, milk, beverages to its students without any considerations, as the cost thereof will be covered in the fee charged. 5.7.1.2 From the submissions made by the applicant, it is seen that, the cost of such goods, are included in the education fees charged by the applicant which would imply that the applicant will be supplying the said goods as part of a composite supply comprising of principal supply in the form of educational services and Since, the necessary books. stationery, drawing material. sports goods, foods items, milk. beverages are supplied to its students as a part of such composite supply wherein the principal supply of service is exempted under Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28-6-2017, Nashik Cambridge Pre-school is entitled for Nil rate of tax as per Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017, on the supply of the mentioned goods to its Pre-school students, without any consideration. 8.3 It is also pertinent to note that the appellant has placed reliance on the Rajasthan Authority for Advance Ruling order dated 02.09.2021 in respect o ..... 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