AAR: GST applicable on 'private institutes' that are not educational institutions

AAR: GST applicable on 'private institutes' that are not educational institutions

The Authority of Advance Ruling, Gujarat (AAR) while examining the definition of the 'educational institutions' held that the 'private institutes' having no specific curriculum, and those do not conduct exam or award a degree are not covered under the said definition and GST shall be applicable to them

The AAR ruled that M/s D.M. Net Technologies (applicant) is not entitled to an exemption for the services it provides to Gujarat University, under Entry at Sr. No. 66 of the exemption Notification No.12/2017-Central Tax (Rate) dated 28 June 2017, as amended. The applicant does not have any specific curriculum and does not conduct any examination or award any qualification/degree. Hence, the applicant does not qualify as an educational institution.

The applicant is handling the courses, namely M.Sc.-IT in Animation, M.Sc.-IT in Mobile application, M.Sc. IT in IMS (Infrastructure Management Systems) and M.Sc. IT in Network Securities, in partnership under Memorandum of Understanding (MOU) with Gujarat University.

The applicant designs the aforementioned courses on request of Gujarat University and the University approved the content of the courses. Based on the approved courses, the applicant provided training to the students as a partner under MOU with Gujarat University. The awareness and admission of the course are done by Gujarat University. The fees for the said courses are also collected by Gujarat University. The applicant helps to administer the admission and fees collection process.

The applicant had sought the advance ruling on the issue- Whether the services provided by the applicant in affiliation to/ partnered with Gujarat University and providing education for degree courses to students under specific curriculum as approved by the Gujarat University, for which degrees are awarded by the Gujarat University are exempt from GST, vide Entry No. 66 of the Notification No.12/2017-Central Tax (Rate) dated 28 June 2017?

The Coram consisting of Sanjay Saxena and Mohit Aggarwal stated that training given by the applicant as private institute would not be covered; as such training does not lead to a grant of a recognized qualification.

The AAR while referring to the order of the AAR, Karnataka passed in the case of M/s Emerge Vocational Skills Private Ltd., wherein the AAR, Karnataka has exempted the services in question vide Entry No. 66 of Notification No.12/2017-CT (Rate) dated 28 June 2017, based on the condition that such education services provided must be as a curriculum for obtaining a qualification recognized by any law for the time being in force.

The AAR stated that the above-mentioned shall not be applicable in the instant matter as the facts of this case are different from the one mentioned above.

The AAR observed, "The applicant is a company enacted under the Company Act, 1956. They are having necessary expertise in the fields of Computer Animation, IT-Infrastructure Management System, and Mobile Computing & Application Education."

The AAR explained that the 'educational institution' covers all the institutions providing services by way of education as a part of a Curriculum for obtaining a qualification recognized by any law for the time being in force.

It stated, "Training given by the applicant as a Private Institutes would not be covered, as such training does not lead to the grant of a recognized qualification. Thus, the applicant does not have any specific curriculum and does not conduct any examination or award any qualification/degree. Hence, the applicant does not qualify as an educational institution."

In the process, the applicant received Fees i.e. 60% of total fees collected from students by Gujarat University that attracts GST @18%. The services provided by the applicant shall not be exempted from GST.

The AAR concluded, "The applicant is not at all entitled for exemption in respect of said services provided by the applicant to Gujarat University, under Entry at Sr. No. 66 of the exemption Notification No.12/2017-Central Tax (Rate) dated 28 June 2017, as amended."