In re Educational Initiative Pvt. Ltd. (GST AAR Gujarat)
(i) Whether the educational assessment examination (ASSET) with its variants) provided by the applicant to school/educational organization is exempted from payment of GST under Sr. No. 66(b)(iv) of the Not. No. 12/2017-CT (rate) dated 28.06.2017 and entry No. 69(b)(iv) of Not. No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 as well as equivalent SGsST Notification.
Ans. Yes, exemption is available in view of the above discussion in respect of ASSET services provided to educational institution.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, GUJARAT
M/s. Education Initiatives Pvt. Ltd. is a private limited company registered under the provisions of Companies Act, 1956 and having a GSTIN : 24AADCS0861R1ZZ, is a company filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the SGST Act.
2. M/s. Education Initiatives Pvt. Ltd. an applicant, iner alia, deals in the products and solutions mainly intended to be used by K-12 education segment i.e. primary and secondary schools for the assessment and learning. The applicant is working with private schools, public schools and leading organization like World Bank, Michael and Susan Dell Foundation, Google, Azim Premji Foundation and is doing large scale assessment projects with various state Governments.
2.1 Among others, one of the offering offered by the Applicant to the schools is ASSET (Assessment of Scholastic Skills Through Educational Testing). The Schools use ASSET for the purpose of assessment, ASSET has gained the wide acceptance across the schools for the purpose of diagnostic assessment of its students. The detailed description is mentioned here in below:
ASSET
2.2 ASSET stands for Assessment of Scholastic Skills Through Educational Testing. It is a scientifically designed, skill-based assessment Exam. Rather than testing rote learning, it uses multiple–choice question to focus on measuring how well SKILLS and CONCEPTS have been understood by the students. The basis nature of ASSET service is an examination to be conducted by Education Institution (School) but outsourced to the Educational Initiatives (EI). The assessment generates examination reports for students, indicative of their progress and topics that require attention and improvement. ASSET is an educational assessment exam taken at school and it does not envisage any kind of coaching and/or training of teachers or administrators. ASSET exam is conducted without any pre/post teaching business relation with the school. The exam is conducted at school and schools, based on their internal policy, make ASSET a part of their evaluation system. They also give student wise appropriate weightage to ASSET score.
2.3 Salient Features of ASSET are as under:
> For student of classes 3-10
> Core subject: English, Maths and Science
> Optional Subjects: Social studies and HINDI
> Asset is skill- based exam
> Provides details customised skill-wise Examination Reports highlighting strengths and weaknesses
> Benchmarks the student’s performance against peers all over the country
> The ASSET exam is conducted at school. And School based on their internal policy makes ASSET a part of their examination evaluation system.
> Schools choose to take the ASSET exam in summer (July-August) or winter (December).
2.4 The applicant submitted that apart from the pen and paper version, ASSET also offers a dynamic online Exam. It has all the advantages of ASSET with some additional benefits like – immediate reports, easy online access to report, increased accuracy in reporting, faster remediation, flexible test dates, fewer logistics hassles etc.
2.5 Benefit of ASSET/ ASSET Dynamic
> Provide feedback/Detailed examination Reports on real learning
> Allows students to know they stand and pinpoints areas of strengths and weaknesses
> Allows schools to benchmark themselves against the best and identify areas requiring improvement
> Provides teachers with insights into where exactly their students stand compared to the national average or another section or school
2.6 The ASSET Student MyBook presents students with customized feedback on their performance. Individual exam results are accompanied by a detailed analysis listing out student’s strengths and weakness. Students also receive practice test concentrating on their weak points. The answer to the exam are made available, with elaborate explanations to enhance the self-learning process and to equip students with skills to avoid misconception in future.
2.7 The Asset teacher My Book is a customized report for each subject teacher on the performance of every class. It points out learning gaps for each students, overall strengths and weaknesses and recommendations to address these.
2.8 The applicant further submitted that customized reports help in determining the strengths and weaknesses of the entire class to enable further improvement, indicates the improvement in the school performance each year, provides sectional analysis of each division of a grade in order to weigh the performance in comparison to other divisions in the same school as well nationally.
2.9 The applicant further submitted that the ultimate users/ beneficiaries of the applicant services are the students of primary and secondary schools, educational institutions, state / central for the purpose of framing public policy in connection with education. These solutions are focused on improving the learning levels of the child in the private schools and government school system.
3. Accordingly, the applicant sought the Advance Ruling on the following, ‘Whether the educational assessment examination (ASSET) with its variants) provided by the applicant to school/educational organization is exempted from payment of GST under Sr. No. 66(b)(iv) of the Not. No. 12/2017-CT (rate) dated 28.06.2017 and entry No. 69(b)(iv) of Not. No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 as well as equivalent SGST Notification.’
Applicant’s Interpretation of Law/Taxation under GST Regime
4.1 The applicant has quoted Sections 95 to 106 of the CGST Act, 2017 and stated that the question on advance ruling put forward by him is in respect of determination of whether the liability to pay tax on any goods or services or both, and also the applicability of a notification issued under the provisions of the GST Act is covered under Section 97(b) and (e) and therefore the applicant satisfies the criterion required for filing the application for advance ruling.
4.2 The applicant submitted that they provide the service of diagnostic assessment examination of students of educational institutions. The said services are availed by the educational institutions. By availing the said service, the educational institutions conduct tests/ examination on students on a yearly basis. Sample copy of Contract for providing services of conducting ASSET exam to educational institution is enclosed.
4.3 The said technique of examination helps assess the student learning and it also aid teachers in identifying the focus areas to support students. Educational institution gets insights about the students learning levels and accordingly plans the remediation for the identified learning gaps.
4.4 The applicant further submitted that services provided by the Applicant to the educational institution are services relating to conduct of examination by educational institution and it is exempted under Sr. No. 66 of Not No. 12/2017-C.T. (Rate) dated 28.06.2017. The said entry is read as under:
66 Services provided –
(a) by an educational institution to its students, faculty and staff;
(aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee:
(b) to an educational institution, by way of,-
(i) transportation of students, faculty and staff
(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;
(iii) security or cleaning or housekeeping services performed in such educational institution;
(iv) services relating to admission to, or conduct of examination by, such institution; up to higher secondary:
(v) supply of online educational journals or periodicals;
Provided that nothing contained in sub-items (i), (ii), and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent
Provided further that nothing contained in sub item (v) of item (b) shall apply to an institution providing services by way of-
(i) pre-school education and education up to higher secondary school or equivalent: or
(ii) education as a part of an approved vocational education course;
Provided that nothing contained in entry (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.
4.5 Term ‘Educational Institution’ is defined in point No. 2 of the same Notification, it reads as under:
y) “educational institution” means an institution providing services by way of,-
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
(iii) education as a part of an approved vocational education course;
4.6 The applicant submitted that on perusal of the above mentioned Entry No. 66, it is observed that various specified services provided by/ to an educational institution are exempt. Service specified under Entry No. 66 are exempt only when the same are provided by/to an institution which qualifies the definition of an ‘educational institution”.
4.7 The applicant further submitted that the phrase “relating to” expands the scope of this entry to include such support services which has relation to conduct of the examination of students.
4.8 The applicant submitted that the service provided by the Applicant is in relation to conduct of online examination by schools and it does not have any other use than in conducting a specific examination. The supply of service is a supply related to conduct of that examination. The applicant is, therefore not liable to pay tax on the service provided to the Educational institution.
4.9 The applicant has placed reliance on the decision in the case of West Bengal AAR in case of Ashok Kumar Basu reported at 2018 (10) TMI, wherein it was held that service to such Educational Institution relating to conduct examination, as described in 66(b) (v) of Not No. 12/2017-CT (Rate) dated 28.06.2017, includes supply of the service of printing question papers and is exempt under the GST Act.
4.10 The applicant, hence stated that he is entitled to get the benefit of exemption under Not. No. 12/2017-CT (rate) dated 28.06.2017.
5. The applicant submitted that term examination is not defined in the CGST ACT; that therefore they resort to law dictionary meaning for sake of reference. The applicant submitted the Dictionary meaning of the terms ‘examination’ as under:
a. Collins Dictionary: An examination is a format test that you take to show your knowledge or ability in a particular subject, or to obtain a qualification.
b. Cambridge Dictionary: the act of looking at or considering something carefully in order to discover something.
c. Marriam Webstar Dictionary: an exercise designed to examine progress or test qualification or knowledge, A detailed inspection or study.
5.1 The applicant submitted that every activity of education institution by which it examines progress or test qualification or knowledge of student would fall under meaning of examination by the educational institution. In the instant case, applicant is providing contents to the school for conducting examinations and after examination provides reports on performance of students. These reports are used by the schools for evaluation of the students. Thus in view of the above, it is submitted that the service provided by the applicant is in relation to conduct of examination.
6. The applicant has submitted that the term “relating to” expands the scope of the entry. The terms have been interpreted by the Supreme Court in the case of CCE V/s Rajasthan State Chemical Works 1999(55) ELT 444 (SC) and Union of India V/s Ahmedabad Electricity Co. Ltd. 2003(158) ELT 3(SC), wherein it has been held that such words widen and expand the scope, meaning and content of expressions. Further, applicant submitted that Hon’ble Supreme Court in case of M/s. Doypack Systems (P) Ltd. Vs UOI 1988 (36) ELT 201 SC held that, “The expression “in relation to” (so also “pertaining to”), is a very broad expression, which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context.”
7. The applicant has submitted Flyer No. 40 (Education Service) issued by the CBIC provides the clarification that the auxiliary services availed by the educational institutions are exempted. The relevant part of the Flyer is reproduced as under:
Education is fundamental to the nation building process. Right to Education is now a fundamental right of every child in India. GST Law recognises this and provides exemption to educational institutions, providing education up to higher secondary school or equivalent, from the levy of GST. Auxiliary services received by such educational institutions for the purpose of education up to Higher Secondary level is also exempt from GST. Other services related to education, not covered by the exemption, would be taxed at a standard rate of 18% with full admissibility of ITC for such taxable services in cases where the output service is not exempt. In a nutshell, every attempt is made to ensure that the core educational services are fully exempt from GST.
7.1 Further, applicant submitted that even as per press release on education issued by CBEC, it is provided that education up to Higher Secondary School level should not suffer GST on output service and also on most of the important input services. Thus intention of legislator is to grant exemption on majority of the input services received by the education institution. Relevant part of the press release is extracted and reproduced as under:
3. Transportation of students, faculty and staff services provided to an educational institution (providing pre-school education and education up to higher secondary school or equivalent) are exempt from GST. Similarly, catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory, to an educational institution providing education upto higher secondary school or equivalent, are also exempt from GST. Further, security or cleaning or housekeeping services performed in such educational institutions are also exempt from GST. Finally, services relating to admission to, or conducting of examination by, such institutions, upto higher secondary, too are exempt from GST.
Thus, education upto Higher Secondary School level does not suffer GST on output services and also on most of the important input services. Some of the input services like transport, canteen etc. provided by private players to educational institutions were subject to service tax in pre-GST era and the same is continued in GST regime.
7.2 Further, applicant submitted that Flyer on GST on education service also provides that auxiliary services are exempted from GST. Relevant part is extracted and reproduced as under:
Regarding, input services, it may be noted that where output services are exempted, the Educational institutions may not be able to avail credit of tax paid on the input side. The four categories of services known as Auxiliary Education services, which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, have been exempted (as per Notification No. 12/2017- Central Tax (Rate)). Auxiliary education services other than what is specified above would not be entitled to any exemption. The exemption also comes with a rider. Such services are exempt only for educational institutions providing services by way of education upto higher secondary or equivalent. (from pre-school to HSC). Thus if such auxiliary education services are provided to educational institutions providing degree or higher education, the same would not be exempt. For instance, the services of conducting admission tests for admission to colleges in case of educational institutions are providing qualification recognized by law for the time being in force shall not be liable to GST.
7.3 The applicant has submitted that under GST Tariff, Education Services are classified under heading 9992 as per Notification No. 11/2017-CT (rate) and are further sub-divided into six groups (as per Annexure to the same Notification) comprising of pre-primary, primary, secondary, higher, specialized and other educational & support services. The same is classified herein below:
