The AAR, Rajasthan in the matter of M/s University of Kota [Advance Ruling No. RAJ/AAR/2022-23/16 dated November 11, 2022] has held that the affiliation provided by the University of Kota to its constituent colleges for imparting education is a supply and taxable under Goods and Services Tax (“GST”) and is not exempted under Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017 (“the Services Exemption Notification”).
Facts:
M/s University of Kota (“the Applicant”) was enacted under Special Act of State Legislative Assembly and is engaged in providing services of education including affiliation to various self-financing/non-Government colleges under its jurisdiction as per the education policy of the State Government. The Applicant grants recognition to the colleges under its jurisdiction and collects affiliation fee as approved by the State Government.
The Applicant submitted that they are not meant to earn profit and is only for the sole purpose of education. The Applicant relied on the fact that the affiliation fees collected by them is actually recovered from the fees of students thus, it is a supply of service to students. Also, as the Affiliation fees are paid out of the fees collected and not by operating any other trade therefore, the services provided by Applicant clearly fall under clause 66 of the Services Exemption Notification.
Issues:
- Whether the services provided by the Applicant relating to affiliation granted to colleges for imparting education is a supply of service liable to levy of GST?
- Whether amount collected by way of affiliation fee is exempted vide S. No 66 of the Services Exemption Notification?
Held:
The AAR, Rajasthan in Advance Ruling No. RAJ/AAR/2022-23/16 held as under:
- Noted that, the entry at 66(b)(iv) of the Exemption Notification seeks to exempt only those services provided to institution in relation to admission of students or conduct of examination for such admission to all the educational Institutions, including the higher educational institutions.
- Stated that, the clarification made under Circular No. 177/09/2022-TRU dated August 3, 2022, does not state that the affiliation fees so collected by Applicant from its affiliated colleges is exempt. Further, the Circular No. 151/07/2021-GST dated June 17, 2021 regarding clarification of GST on supply of various services by Central and State Board (such as National Board of Examination), it is clarified that 18% GST will be applied to other services.
- Stated that, GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional (accreditation fee or registration fee such as fee for FMGE screening test) so as to authorize them to provide their respective services which is more relevant in the matter.
- Noted that, the affiliation services provided by the Applicant enables the institution to conduct the course/programme and do not relate to admission of students to such course/programme in the said institutions or conduct of examination for such admission in the said institution.
- Further noted that, the exempted services on the conduct of examination is that related to the admission to such institution and not related to the examination based on which degree/title, etc. are conferred to the students, as is being claimed by the applicant, though we do not part any opinion on the claim of the applicant that they extend such services to the institutions by extending the affiliation.
- Held that, the affiliation provided by the Applicant to its constituent colleges for imparting education is a supply and taxable under the Central Goods and Services Act, 2017 (“the CGST Act”).
- Further held that, ‘affiliation fees’ so collected by the Applicant is not exempted under the entry SI. No. 66 of the Exemption Notification as amended.
Relevant Provisions:
Sl. No. 66 of the Services Exemption Notification:
|
“Sl. No. |
Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate (percent) | Condition |
| 66 | Heading 9992 or Heading 9963 | Services provided –
(a) by an educational institution to its students, faculty and staff; (aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee; (b) to an educational institution, by way of,- (i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or house-keeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution; Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent. Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of,- (i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course. (v) supply of online educational journals or periodicals: |
Nil |
Nil” |
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