The Appellate Authority on Advance Ruling (AAAR), Kerala has upheld an earlier ruling by AAR that private institutes are not educational institutions that give degrees or or grant qualification. The services tendered by them to students to help them qualify for a degree from a professional body would not get tax exemption and would be liable to pay taxes.
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The AAAR ruling has come in an appeal filed by Logic Management Training Institute, Kochi against a May order of AAR, Kerala. While approving the decisions of the AAR, the appellate Authority said the appellant is not providing any elementary education or pre-school or up to higher secondary level or equivalent, not is it engaged in providing Education as part of approved vocational education course, hence, it cannot be categorized as ‘education institution’ and liable to pay GST.
Also, it clarified that conduct of degree courses by colleges, universities or institutions which lead to grant of qualifications would be covered, and training given by private coaching institutes would not be covered, as such training does not lead to grant of recognized qualification. Further, appellant is not issuing any valid course completion certificate or any CA, CMS, CS, ICWA degree. Coaching in Appellant’s institution is not a mandatory compliance for an aspirant in pursuing study and obtaining certificates, it is also not mandatory on student’s part to furnish any certification or nomination or forwarding of their application or registration through the Appellant to the concerned statutory body for awarding course certificate, and the training imparted by Appellant might be helping the aspirants to clear the test/examinations of ICAI, ICWA etc., but doesn’t per se lead to grant of certificate or degree.
Accordingly, private coaching centres or other unrecognized institutions, though self-styled as educational institutions, would not be treated as such under GST and thus cannot avail exemptions, AAR ruled.
It, however, said that if the activity of the appellant resulted in it paying fees on behalf of students to recognise degree, diploma giving institutions as pure agents without taking any service charge, such amount could claim exemption from GST.
Further, the AAR said that entire consideration received by Appellant from recipient of services (i.e. enrolled students) as examination fees/other fees is liable to GST and adds that hostel facility provided by Appellant to students and sale of textbooks to students, qualifies as a ‘Composite Supply.