In re Master Minds (GST AAAR Andhra Pradesh)
The applicant is not eligible for the exemption under Entry No.66 (a) of Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017, as a Service provider for Supply of service of education to the students for obtaining Qualifications/certificates of CA-Foundation, CA-Inter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate.
The appellant is a coaching Institute providing coaching to the students appearing for the Intermediate, CA Foundation Course, CA, CMA and also provide hostel accommodation and catering services to the students.
It is the case of the appellants that since their service is providing education as part of a curriculum for obtaining Chartered Accountant, Cost Management Accountant as an educational Institution, they were exempted. No service tax was levied earlier under the Service Tax or leviable there to under the Goods and Service Tax enactments.
The appellant further submits that the appellant sells books and coaching materials published by him as per the syllabus of ICAI and IAWAI to the students issuing separate bills and the value of these books shall be deducted as they are exempted from GST from the value of the consideration received from the students.
We have gone through the entire submission made by the appellant along with the Ruling pronounced by the Authority for Advance Ruling. On perusal of the appeal and submission made by the appellant at the time of Personal Hearing, it is observed that the main issue of contention is whether the appellant is an educational institution or not.
Board of Studies (BOS in short) is a wing created by the Institute of Chartered Accountants of India (ICAI in short). The BOS is imparting theoretical education for CA through online courses, Journals etc., to the enrolled candidates. Similarly the ICWAI is conducting classes through the counselors appointed on Honorarium as well as computer soft skills to the registered candidates.
The ICAI or ICMAI does not affiliate nor recognize any other education institutions for the purpose of Theoretical education, Practical training. The BOS /Counselor is imparting Theoretical education through online lectures, Practical training to the registered candidates. . The registered candidate is eligible to appear for the examinations conducted by the said Institutes at various level of entry points.
The Supreme Court in the case of Nidhi Kaim v. State of M.P., (2016) 7 SCC 615, “for the proposition that the examination is considered as a common tool around which the entire education system revolves”
As indicated herein before, the institution is being run for a specific purpose to the extent to cover the topics in the subjects of the prescribed Syllabus for CA/CMA, namely, to prepare the students for appearing in various level of theoretical examinations for the said qualification, but it itself appears to be not authorized, there for, nor can it be said to be sufficient to complete the Curriculum by the candidates to qualify as CA/CMA.
If such a wide meaning is given to the word “education” so as to bring within its purview the coaching institutions, it will defeat the Purpose of the Act.
What is the meaning of ‘education as a part of curriculum for obtaining a qualification recognized by law’?
It means that only such educational services are in the negative list as are related to delivery of education as ‘a part’ of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to understand that to be in the negative list the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be covered. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification
Added to this, the Chartered Accountants Act as well as the Cost and Works Accountants Act, both clearly do not recognize the “education” imparted by Universities or affiliated bodies towards the award of any degree, diploma or certificate as given by such Institutes. In fact, such Universities and Bodies are not even permitted to use any name or nomenclature which is in any way similar to that of the said Institutes. In this context, Section 15 A of the Chartered Accountants Act, 1949 and Section 15 B of the Cost and Works Accountants Act, 1959 regarding imparting education by Universities and other bodies were incorporated in the respective Acts in the year 2006.
Therefore, the “education” imparted by the Appellate would not lead to the obtaining a qualification recognised by the said Institutes. Needless to say that the Appellant is not an affiliate of the said Institutes and hence would only be referred to as a coaching institute and not an educational institution.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
(Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act, 2017).
At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST 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 APGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and APGST Act”] by M/s Master Minds, Guntur (herein after referred to as the “Appellant”) against the Advance Ruling No. AAR NO.08/AP/GST/2020 dated 05.03.2020 Authority for Advance Ruling, Andhra Pradesh.
1. Brief Facts of the Case:
1. The appellant is a coaching Institute providing coaching to the students appearing for the Intermediate, CA Foundation Course, CA, CMA.
2. The appellants also provide hostel accommodation and catering services to the students.
3. The appellant claimed exemption from service tax during the service tax regime under the serial No. 66D(1)(ii) of the Negative List up to 01.03.2016 and under the Notification No.25/2012-ST dt.20.06.2012, as amended thereafter as ‘Educational Institution’ as per the definitions provided in the respective provisions detailed above.
4. It is the case of the appellants that since their service is providing education as part of a curriculum for obtaining Chartered Accountant, Cost Management Accountant as an educational Institution, they were exempted. No service tax was levied earlier under the Service Tax or leviable there to under the Goods and Service Tax enactments.
In the above circumstances the Appellant approached the Advance Ruling Authority-Andhra Pradesh for Ruling on the following queries:
1. Whether the services of ‘supply of service of education’ as per the curriculum prescribed by the statutory authorities/ government to the students of the applicant for obtaining qualifications/ certificates of CA-Foundation, CA-Inter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate duly recognized by the respective statutory authorities/ government are exempted under Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017 (entry no.66 (a)), as amended?
2. Whether the charges collected for providing accommodation to the students undergoing the above courses are exempted from GST as provided under Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017 (entry no.14), as amended read with Circular No.32/06/2018-GST dt. 12.02,2018 since the amount charged from the students by the hostel run by the applicant is less than Rs.1000/- per day?
3. Whether the charges collected by the applicant for catering service by supplying food to the students undergoing the above courses are exempted from GST as provided under Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017 (entry no.66(a)), as amended?
The Authority for Advance Ruling Andhra Pradesh in the impugned orders in AAR NO.08/AP/GST/2020 dated 05.03.2020 held:
1. The applicant is not eligible for the exemption under Entry No.66 (a) of Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017, as amended as a Service provider Supply of service of education as per the curriculum Prescribed by the statutory authorities/government to the students of the applicant for obtaining Qualifications/certificates of CA-Foundation, CA-Inter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate duly recognized by the respective statutory authorities/ government.
2. The applicant is not eligible for the exemption on the Charges collected for Accommodation from the wards under Entry No. 14 of Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017
3. The applicant is not eligible for the exemption on the Catering service and food supplied to the students Under Entry No.66 (a) of Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017.
Aggrieved by the impugned order dated 05.03.2020 the Appellant has filed the present Appeal, inter alia, on the following grounds which are urged without prejudice to each other:
2. Grounds of Appeal:
1. The impugned order of the learned Advance Ruling Authority is not a speaking order and passed with a revenue bias without considering any of the submissions made and numerous citations cited by the appellant in the application. The impugned order is also passed in violation of judicial discipline as the same is passed without considering the decisions from various Courts and without even distinguishing them.
2. The learned authority misread the definition of the term ‘educational institution’ given in Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017 which brought educational services out of the purview of GST, if supply provided is (a) related to education (b) the education is provided is as a part of a curriculum and (c) the education is provided for obtaining a qualification recognised by any law for the time being in force. If any of these conditions is not satisfied, the appellant shall not qualify to be eligible for the exemption. The appellant had clearly explained in his application how he fulfils all the above conditions and the appellant’s detailed submissions were even recorded in para 4.10 to 4.27 of the impugned order the appellant’s detailed submissions were recorded. But they are not controverted by the authority while passing the order but simply denied the exemption by passing a bald order.
3. The finding given by the learned lower authority that the appellant is not an educational institution since he is providing only part of the curriculum but not providing training or coaching for all the syllabus prescribed by the above statutory bodies is irrelevant. The definition of the term ‘educational institution’ clearly provides that education must be imparted as a part of such curriculum i.e., it must be a part of the syllabus for such course or qualification. The appellant is providing education as a part of syllabus prescribed by the statutory bodies and this fact is not negated by the learned authority. There is no explanation as to which part of the curriculum was not followed by the appellant.
4. The finding of the learned authority that since the appellant is not recognised or affiliated with these statutory bodies, it cannot be treated as educational institution is beyond the definition of the term ‘educational institution’. A plain reading of the definition of the term ‘educational institution’ does not mention that only those institutes which are accredited or recognized to the statutory bodies are eligible for the exemption. Nowhere in the said Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017 such legal requirement is prescribed that an educational institute shall be recognised or affiliated by these statutory bodies. The only condition prescribed under the GST law vide the said notification is that the education imparted should be part of curriculum and this education should lead a student to obtain a qualification recognised by any law.
5. The learned authority has erred in treating the coaching offered to students preparing for entrance examinations like IIT, EAMCET as similar to the activities undertaken by the appellant. The coaching offered to these entrance examinations does not lead to any qualification recognized by law. After passing an entrance exam such as IIT-JEE, EAMCET etc., the students need to apply for the institutes for admission basing on the rank card. In the instant case of the appellant, the students register with the ICAI, ICMAI institutes and there after obtains coaching from the appellant, based on the curriculum provided by these statutory bodies and obtain a qualification recognized under law after the coaching and attending to examinations. This distinction though explained in the application by the appellant, the lower authority did not consider the same.
6. The ground taken by the learned authority to deny the exemption to the coaching imparted by the appellant is that the said coaching does not lead to grant of any certificate recognised by law and therefore, it is not an educational institution. This is both factually and legally incorrect. The coaching to all the courses viz., CA-Inter, CA-Final, ICWA-Final and ICWA-Inter and Intermediate education leads to grant of certificates duly recognised under the law. This had been clearly explained in the application. Further, as explained clearly in the application, granting of a certificate is not a condition in the said Notification to claim the exemption and this condition was existing prior to 2011. This submission also though made was not at all considered. The impugned order was clearly passed with pre-determined mind set.
7. The learned lower authority had given the findings in the order traversing beyond the definition and meaning provided in the statute. The authority misread and misinterpreted them without considering the submissions made by the appellant with regards to rules for statutory interpretation which provide that an exemption Notification should be read literally as it is written and to be construed liberally. The following judgments of Hon’ble Supreme Court cited and explained in the application were not considered by the lower authority in utter disregard to the Apex Court judgements in violation of principle of judicial discipline.-
(a) State of Gujarat Vs. Reliance Petronet Ltd [2008(227) ELT 3(SC)].
(b) Kohinoor Elastics (P) Ltd vs. Commissioner of Central Excise, Indore (2005) 7 SCC 528.
(c) Compack (P) Ltd vs. Commissioner of Central Excise, Vadodara (2005) 8 SCC 300 (para 20 refers).
(d) CC (Prev), Amritsar Vs. Malwa Industries Ltd [2009(235) ELT 214 (SC)] (para 20 refers).
8. The learned authority deliberately ignored the contention of the appellant that the term ‘education’ is very wide and every coaching or training shall be treated as education. The appellant relies upon the following decisions in this regard:
(a) The Hon’ble Supreme Court in Gujarat University Vs. Krishna Ranganath Mudholkar AIR 1963 SC 703 wherein it is held that the expression “education” is of wide import and includes all matters relating to imparting and controlling education.
(b) The Hon’ble Supreme Court in the case of Sole Trustee, Lok Shikshana Trust v. CIT, (1976) 1 SCC 254 wherein the term “education” was held to mean:-
“the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. What education connotes is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.”
(c) The Hon’ble Supreme Court in the case of P. A. Inamdar v. State of Maharashtra, (2005) 6 SCC 537 wherein it was held as follows:-
“81. “Education” according to Chambers Dictionary is “bringing up or training; strengthening of the powers of body or mind; culture”.
82. In Advanced Law Lexicon (P. Ramanatha Aiyar, 3rd Edn., 2005, Vol. 2) “education” is defined in very wide terms. It is stated:-
“Education is the bringing up; the process of developing and training the powers and capabilities of human beings. In its broadest sense the word comprehends not merely the instruction received at school, or college but the whole course of training moral, intellectual and physical; is not limited to the ordinary instruction of the child in the pursuits of literature. It also comprehends a proper attention to the moral and religious sentiments of the child. And it is sometimes used as synonymous with ‘learning’.”
9. The learned Authority erred in holding that since the appellant is not issuing any coaching completion certificate and since the student has the liberty to leave the institute, the appellant’s institute cannot be considered as Educational Institution. This observation/ finding is not at all relevant while considering the exemption to the appellant. Once the appellant fits into the description of the term ‘Educational Institution’, other factors are irrelevant, as a student in a University can also discontinue his studies. The only relevant factor is that education imparted by the appellant is a part of curriculum for obtaining a statutory qualification. For this reason, a government college or university can also be held to be not an educational institution as students drop out from these colleges/ universities also.
The denial of exemption to the supply of service of education is against the policy of the Government. Various circulars issued by the CBIC placed before the learned authority were simply ignored by it.
10. The appellant is treated as an ‘educational institution’ by the Central Government Authorities as can be seen from the correspondence the appellant had with the office of the Provident Fund Commissioner, Guntur and Employees State Insurance Corporation, Vijayawada, filed herewith relevant parts of the said letters are extracted below for ready reference:
Letter dt.12.07.2017 from the PF Commissioner:
“On the basis of particulars furnished by you on 09-07-2007 and on the basis of the Inspection of the records of your Establishment conducted by the Enforcement Officer on 06-07-2007 and 10-07-2007, it is evident that
(a) Your Establishment/factory viz., M/s Master Minds, 5-25-72, 3/11, Brodipet, GayatriNilayam, Guntur is engaged in Educational Institution imparting knowledge and training which is included in schedule/class of establishments which are included in Employees Provided Fund and Miscellaneous Provisions Act, 1952.”
Letter dt.21.11.2018 of the ESI:
“1. I have to inform you that u/s 1 (3) of the ESI Act the Central Govt, has made the provisions of the Act applicable to all the factories coverable under u/s 2(12) of the Act, within the area specified in the Notification.
2. I have to inform you that the appropriate Govt, has extended the provisions of the Act, to other establishments u/s 1(5) of the Act w.e.f. 01.05.2008 vide Andhra Pradesh Gazette Notification No. 582 dt. 14-10-2008 to those areas where ESI Scheme has already brought to force under sub-section (3) and (5) of Section 1 of the ESI Act, 1948 and shall apply to Private Educational Institutions (those run by individuals, trustees, societies or other organisations) and Medical Institutions (Including Corporate, Joint Sector, Trust, Charitable and Private Ownership hospitals, nursing homes, diagnostic Centres, pathological labs) wherein 20 or more persons are employed or were employed on any day of the preceding twelve months, except Medical and Educational Institutions established and run by Ramakrishna Math and Ramakrishna Mission.
3. It is clear from the Government of India through their letters issued from PF office and Employees State Insurance Corporation that they had already taken a view that the appellant’s establishment is an “Educational Institution”. The Hon’ble Advance Ruling Authority taking a contrary view is not in consonance with the Government’s consistent stand and therefore liable to be rejected.
4. Prior to introduction of GST, Service Tax was exempted on the education provided by an ‘educational institution’. The relevant extract of Notification No.25/2012-ST dt.20.06.2012 was re-produced in Para 8.4 to 8.5 of the impugned order. The wordings are exactly same in the case of Notification No.12/2017 – Central Tax (Rate) dated 28.6.2017 which granted such exemption in GST. The appellant was accordingly allowed the exemption during the Service Tax regime and the orders passed by the Commissioner of Service Tax was accepted by the committee of Chief Commissioners including one of the Hon’ble Members of this Appellate Authority. It is highly improper to deny the same under GST when identical exemption is provided that too when the adjudication orders passed in his favour were accepted by the Committee of Chief Commissioners and even refund of the service tax paid was sanctioned to him. The Hon’ble Tribunal in the case of Sri Chaitanya Educational Committee Vs. CCE, Guntur [2018(4) TMI 664-CESTAT-Hyd ] examined the provisions of various periods and held that coaching institutes providing coaching do fall under the definition of the term ‘educational institution’. Though the Tribunal’s Order was issued only up to 2014-15, subsequent changes i.e., introduction of the definition of the term ‘educational institution’ in Notification No.25/2012-ST dt.20.06.2012 makes the appellant eligible for the exemption re-produced in Page 16 and 17 of the impugned order clearly indicates that the issue is same in both in respect of Service Tax and GST. This decision and documents though produced were not considered by the learned lower authority. The definitions of this term ‘educational institution’ under both the Acts are again extracted below for ready reference:
