GST update 251 on levy of GST on educational conference organised by school

GST law has kept supply of certain goods and services as exempted including essential services such as health care services, educational services as it is statutory obligation of the Government to provide free education to the citizens of India. Recently, an issue was raised regarding admissibility of GST exemption on the educational conference organised by the school which was reported before Madhya Pradesh AAAR in the case ofM/S IN RE EMERALD HEIGHTS INTERNATIONAL SCHOOL SAMITI. The decision delivered in this regard is subject matter of discussion of our present update.

The appellant is registered as a Charitable Institution under Section 12AA of Income Tax Act and owns and runs The Emerald Heights International School. It is submitted that the society is not engaged in any other activity and does not have income other than the school. The school is not registered under GST since it is providing exempt services related to education. Further, it is affiliated with various National and International Organisations which are promoting education and sports worldwide. Amongst various organisations, it is a member of Association Round Square. The Association is an internationally diverse network of 200 like schools in 50 countries wherein they connect to world-class programmes, experiences, develop cultural networks, organises conferences etc. The appellant intends to enter into an agreement with the Association wherein the school shall be host of the conference in its own rights as a principal and not as an agent. Consideration for the above programmes shall flow from the Round Square to the appellant with the list of members and staff. The appellant sought advance ruling before AAR for which negative answers were received. The questions raised are as follows: -
1.     Will the consideration received by school from the participant school for participation of their students and staff be exempted vide S. No. 66 or 80 Vide Notification No. 12/2017 dated 28.06.2017.
2.     If it is not exempted, in which category of service it shall fall and what will be tax rate?
3.     Whether any exemption is provided to service providers of catering, security, cleaning, housekeeping etc. to an educational institution up to higher secondary be available to service providers of the appellant?
4.     Whether ITC would be eligible of all input services availed for the purpose of conference?

The appellant submitted that AAR passed the ruling without appreciating the facts laid down since the AAR issued order in name of “Emerald Heights School” and held that the school is not registered under Section 12 AA. However, on the other hand, considering the actual scenario, the “society” is the “appellant”. Consequently, the exemption is denied to the appellant. It was submitted that the appellant is an educational institution and therefore, entitled to exemption under Notification No. 12/2017 dated 28.06.2017. The appellant is providing services to students and teachers across the Globe who are also member of “Round Square”. Therefore, any services provided by educational institutions to its students, staff or faculty is exempted vide aforesaid Notification. Furthermore, since the appellant is an educational institution and therefore, the services provided to the appellant such as transportation, catering etc. are exempted. Also, no conditions are attached to the description of the said exemption. It is argued that the service provided by appellant stands exempted vide Entry no 80 of the said notification being services by way of coaching in recreational activities related to art, culture and sports by institution registered under Section 12AA of Income Tax Act.However, since the appellant needs to classify the nature of services under one single service head so as to claim exemption, it is submitted that the said service is exempted vide Entry No. 80 of the Exemption Notification.

The AAAR analysed the current scenario and held that the application made by the appellant clearly shows that the application was signed in the name of “Emerald School Heights (Runa and Owned by Emerald Heights School Samiti)”. It was stated that it is not the job of AAR/AAAR to investigate since they are not the fact-finding authorities. It is the duty of applicant to come clean hands. Further, any ruling obtained by fraud or suppression of facts may be declared void-ab-initio. The appellant in the present case declared and submitted that it is registered under Section 12AA of Income Tax Act. Further, it is evident that the charitable institution runs and owns the educational institution, practice of which exists during erstwhile GST regime. This is further explained by CBIC in its “e-version of GST Flyers at chapter number 39 of 51 chapters”. The purpose of conference is to provide recreational activity related to arts, culture or sports.Thus, it is crystal clear that service provided by conference related to training and coaching are covered under the said exemption notification and hence, not covered within the ambit of GST. Therefore, question of category of service does not arises. As regards to input tax credit, since output tax liability stands exempted, the appellant is not eligible to avail input tax credit.

Although it is well known fact that advance ruling authorities are following pro-revenue approach yet, rulings like these in favour of taxpayers is what is the anticipated in future as well. Furthermore, Government ensures that every core educational service is fully exempt from GST and as in the present case, the educational conference was organised by school, no GST was payable on the same. It is also worth mentioning that although the AAAR held that the order passed by AAR is void due to wrong facts presented by the appellant, the decision was rendered on merits, that too, in favour of the appellant which is highly appreciated.

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GST update 251 on levy of GST on educational conference organised by school

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