In re M/s Arivu Educational Consultants Pvt. Ltd. (GST AAR Karnataka)
Does the activity of collecting exam fee (charged by any university or institution) from the students and remitting to that particular university or Institution without any value addition to it, amount to taxable service?
The activity of collecting exam fee (charged by any university or institution) from students and remitting the same to that particular university or institution without any value addition to it is a service as a pure agent and hence the value is excluded from the taxable value of the applicant as per Rule 33 of the Central GST Rules / Karnataka GST Rules.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
ORDER UNDER SECTION 98(4) OF COST ACT, 2017 & UNDER SECTION 98(4) OF KGST ACT, 2017
M/s Arivu Educational Consultants Pvt, Ltd., No.37, 4th Main, Maruthi Extention, Raiajinagar, Bengaluru-560021, (herein after referred as applicant) having GSTIN number 29AADCA052831,ZO, filed an application fOr Advance Ruling under Section 97 of CGST Act, 2017 & MGST Act 2017 read with Rule 104 of CGST Rules 2017 & MGST Rules 2017, in form GST ANA-01, discharging the fee of Rs,5.000/- each under the COST Act and the KGST Act.
2. The Applicant is a private limited company, registered under the Goods and Services Act, 2017, provides the coaching, learning and training services in relation to under-graduate, graduate and post-graduate degree, diploma and professional courses on a standalone bases to students or for any institution, corporate, company, institutes, universities and colleges in the subject and branches of all types of disciplines such as commerce, hardware, software, computer, science, arts. business management, engineering, medical, industrial, pharmacy, mining, military, dance, acting, sports, journalism and any other field of education and set up of coaching and training classes/ centres in relation to the same.
3. In this process the applicant collects certain amount as exam fee from the students and remits the same to the respective institute or college or universities without any profit element. in one such transaction the applicant collects CIMA (Chartered Institute of Management Accountants) exam fee from the students registered with applicant for coaching and remits the exact amount collected to CIMA on behalf of the students.
4. The Applicant had sought advance ruling on the question:
Dc3e the activity of E-Yillecting e*am fee (charged by .any university or institution) frorn the students and remitting to that partkular university or Institution witithut.iany value aciclitiort to it, arnaz4rtt to taxable service.
5. The applicant reiterated that they provide services as reiterated above and during this process collect certain amount as exam fee from the students and remit the same to the respective institute or college or universities without any profit . element, When they collect fee from the students and make the payment to CIMA on authorization from the students then in such cases the applicant acts as a pure agent and this payment is separately indicated in the invoice issued to the respective students. Applicant provides this kind of service to the students in addition to the services of training and coaching The applicant is of the opinion that this kind of activity will not amount to service and is not liable for CST.
PERSONAL HEARING
6. Sri. Rakesh K.S. Chartered Accountant and authorised representative of the applicant appeared for perSonal hearing proceedings made the following Submissions:
6.1 The Applicant provides coaching, learning and training services in relation to under-graduate, graduate and post-graduate degree, diploma and professional courses on a standalone bases to students or for any institution, corporate, company, institutes, universities and colleges in the subject and branches of all types of disciplines such as commerce, hardware, software, computer, science, arts, business management, engineering, medical, industrial, pharmacy, mining, military, dance, acting, sports, journalism and any other field of education and set up of coaching and training classes/ centers in relation to the same
6.2 In this process, the applicant collects certain amount as exam fee from the students and remits the same in bulk to the respective institute or college or universities without any additional charges or profit element. When they collect fee and make the payment on authorization of the student in such cases, the applicant states that he acts as pure agent and this payment is separately indicated in the invoice issued to the respective students.
FINDINGS AND DISCUSSION
7. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by Sri. Rakesh K.S., Chartered Accountant and duly authorised representative of the applicant. during the personal hearing. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts 86 the applicant’s interpretation of law,
At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions. a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act_
7.1 On verification of the nature of the activity carried out by the applicant with regard to the question it was observed that they provide coaching, learning and training services in relation to under-graduate. graduate and post-graduate degree, diploma and professional courses on a standalone bases to students or for any institution, corporate, company, institutes, universities and colleges in the subject and branches of all types of disciplines such as commerce, hardware, software, computer, science, arts, business management, engineering, medical, industrial, pharmacy, mining, military, dance, acting, sports, journalism and any other field of education and set up of coaching and training classes/ centers in relation to the same. For the coaching services provided the applicant, the applicant is liable to pay taxes and this is not a subject matter of this advance ruling.
7.2 In this process applicant also collects certain amount as exam fee from the students and remits the same try the respective institute or college or universities without any additional charges or profit element. The applicant makes the payment in bulk on behalf of all students, after collecting the same and then issues invoice to the student for the reimbursement of the payment made on behalf of him. This payment is separately indicated in the invoice issued to the respective students.
‘7.3 “Educational institution” is defined in Para. 2(y) of the Notification No. 12/2017- Central Tax (Rate), the 28th June, 2017 as an institution providing services by way of:
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