GST UPDATE ON ADMISSIBILITY OF GST EXEMPTION TO IIM

GST UPDATE ON ADMISSIBILITY OF GST EXEMPTION TO IIMs:
The Advance Rulings have pronounced contrary decisions as regards leviability of GST on the various courses offered by IIMs. The Authority for Advance Ruling Bangalore and Madhya Pradesh have concluded that when there is specific exemption available to IIM with respect to specific courses offered by it under serial no. 67 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, then, the benefit of general exemption as contained in serial no. 66(a) of the same exemption notification which is applicable to ‘educational institution’ will not be admissible to IIM even after enactment of IIM Act. However, on the contrary, the decision rendered by AAR Kolkata in case of Indian Institute of Management, Calcutta [2018-TIOL-242-AAR-GST] is entirely different from the decision as pronounced by AAR Bangalore and AAR Madhya Pradesh. The AAR Kolkata has opined that after the enactment of IIM Act, it is very well covered by the definition of educational institution for the purpose of general exemption under serial no. 66(a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2018. It was held that IIM being covered by the term educational institution is equally entitled for the benefit of both the entries being 66(a) and 67. It was also concluded that Supreme Court has held that if assessee is entitled for two benefits, it is at the option of the assessee to avail any benefit irrespective of the fact that the benefit is claimed under general exemption or specific exemption. Since there were contrary decisions on the issue, clarification from the government was the need of hour and recent clarification issued vide Circular No. 82/01/2019-GST dated 01.01.2019 has resolved the conflict as regards admissibility of exemption to IIM for courses other than those specifically mentioned in serial no. 67.

The circular has clarified the position as regards leviability of GST for different periods on the various courses offered by IIMs as follows:-
01.07.2017 to 30.01.2018:-
IIMs were not covered by the term ‘educational institution’ and so were not eligible for the exemption under serial no. 66(a) of the Notification No. 12/2017-Central Tax (Rate). Consequently, IIMs were eligible for GST exemption only on specified courses as mentioned in serial no. 67 of the said notification no. 12/2017-Central Tax (Rate) which reads as follows:-
(i) two-year full time Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian Institute of Management,
(ii) fellow programme in Management,
(iii)five years integrated programme in Management
Therefore, GST was payable on other courses offered by IIMs except the courses listed above.
W.e.f. 31.01.2018:-
Indian Institutes of Management Act, 2018 came into force on 31.01.2018 , ‘IIMs’ are educational institutions as they provide education as a part of curriculum for obtaining qualification recognised by law for the time being in force. Consequently, w.e.f. 31.01.2018, IIMs has the option to claim general exemption under serial no. 66(a) of the notification no. 12/2017-Central Tax (Rate) or specific exemption under serial no. 67 of the notification no. 12/2017-Central Tax (Rate). The justification for availing exemption under either of the serial no. 66(a) and 67 is backed by decisions given by the Hon’ble Supreme Court that if there are two or more exemption notifications available to the assessee, the assessee can claim the one that is more beneficial to him. However, IIMs are liable to pay GST at the rate of 18% for short term programs for executives/professionals as such programs are not for any qualification recognised by law.

Now, the clarification issued by the Tax Research Unit (Ministry of Finance) supports the view of Authority of Advance Ruling of Kolkata. However, as regards IIM, Bangalore and IIM, Madhya Pradesh is concerned, they are bound by the decision pronounced by the respective advance rulings according to the provisions contained in section 103 of the CGST Act, 2017. However, it is worth noting that the provision contained in sub-section (2) of the section 103 states that the advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. It is worth mentioning that while pronouncing the decisions by Advance Ruling, the fact that IIM Act has been implemented with effect from 31.01.2018 was considered and adverse opinion was framed. Consequently, there is no change in the facts or circumstances supporting the original advance ruling. Now, the question arises is that whether issuance of clarification vide Circular can be considered as change in law so as to invoke the provisions of section 103(2) in case of IIM Bangalore and IIM Madhya Pradesh? Well, confusions are inbuilt in the newly implemented GST regime and are expected that the same would be resolved only after bearing of litigation cost by the helpless assessees.
The content of this GST update is for educational purpose only and not intended for solicitation.
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GST UPDATE ON ADMISSIBILITY OF GST EXEMPTION TO IIM

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