Advance Ruling on GST Exemption for Foreign University Admissions

In re Salve Maria International (GST AAR Kerala)

In a recent advance ruling, the Kerala GST Authority (AAR) examined the GST applicability on services provided by M/s. Salve Maria International, a consultancy firm assisting students with admissions to foreign universities. The firm, representing various institutions in the UK, Canada, and Australia, argued that its services should be GST-exempt under Notification No. 12/2017. This exemption applies to educational institutions offering recognized qualifications as per Indian law. The firm’s claim was based on the universities’ membership in the Association of Indian Universities (AIU) and the Association of Commonwealth Universities, which recognize mutual degrees. M/s. Salve Maria contended that these memberships qualified the courses as “recognized by law,” thereby exempting them from GST.

The Authority, however, ruled that the courses offered by these foreign universities do not fall under the “recognized by law” provision as outlined in Notification No. 12/2017. Citing the CBIC circular clarifying exemption guidelines, the AAR noted that to qualify as an educational institution under GST law, courses must be recognized by Indian law, specifically through an Act of the Union or State Government. Since these foreign programs are not recognized under any Indian statutory provisions, the services provided by the applicant do not meet the criteria for GST exemption. Therefore, the ruling concluded that M/s. Salve Maria International must charge and remit GST on its services related to foreign university admissions.

Advance ruling for clarification on exemption of admissions to foreign universities and mutual recognition of degrees and other qualifications with respect to the universities under Association of Indian Universities and Association of Common Wealth Universities

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KERALA

M/s. Salve Maria International, 18/240, C36/511, Santhom Complex, Kottaramattom, Pala, Kottayam (hereinafter referred to as the applicant) is a registered partnership firm bearing GSTIN 32ACAFS1546D1ZO. The applicant is the official representative of several Universities and in the United Kingdom and Canada. The students who wish to pursue higher education in these institutions will be counseled and provided with proper awareness in respect of institutions and courses offered by them. The required documents submitted by the students will also be uploaded into the websites of the respective institutions. Once the admission is confirmed, visa process will be done by the applicant and students will be ready for departure for their studies abroad.

2. At the outset, the provisions of the Central Goods and Services Tax Act, 2017 (herein after referred to as CGST Act) and the Kerala State Goods and Services Tax Act, 2017 (herein after referred to as KSGST Act) are same except for certain provisions. Accordingly, a reference herein after to the provisions of the CGST Act, Rules and Notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the Notifications issued there under.

3. The applicant requested advance ruling on the following:

3.1. Clarify whether the services in relation to admission to foreign universities are exempt under notification No: 12/2017 amended vide notification 2/2018.

3.2. The courses of Universities, which are members of Association of Indian Universities and Association of Common Wealth Universities, which have entered into memorandum of understanding for mutual recognition of Degrees or other qualifications offered is considered as recognized by law in India.

4. Contentions of the Applicant:

4.1. The applicant is the official representatives of foreign Universities of United Kingdom and institutes in Canada. Recently only the applicant started representing Universities in United Kingdom and the courses offered by them are graduate and post graduate courses and the applicant is restricted to admissions to such courses only. These universities are recognized by Association of Indian Universities and they are also members of Association of Common Wealth Universities.

4.2. The applicant has received remuneration from foreign universities and institutions on the basis of students who join and pursue studies in the respective institutions and these amounts are received in convertible foreign exchange.

4.3. As per the applicant’s interpretation, services in relation to admission to Universities between which the Association of Indian Universities have entered into Memorandum of Understanding are exempt as per the notification 12/2017 as amended by notification 2/2018. As per the amendment to the above Notification an Educational institution providing service by way of education as a part of a curriculum for obtaining a qualification recognised by any law is also exempted along with higher secondary education. Thus, in view of the above amendment, any services relating to admission to educational institutions which is imparting education for obtaining a qualification which recognized by law for the time being in force, will be exempt from levy of GST.

4.4. The argument of the applicant is the definition of educational institution uses the words” recognized by law for the time being in force” it becomes important to peruse whether any education /qualification which is imparted by a foreign university will also be considered as recognized by law for the time being in force and will be exempt from levy of GST.

4.5. The applicant submits that they provide services in relation to admission to foreign universities approved by Association of Indian Universities. As the Australian Universities are approved by Association of Indian Universities the courses offered by them are also acceptable by law for the time being in force in India. So they are eligible for exemption as per amended Notification No. 12/2017.

4.6. In support of their claim the applicant relies on the larger bench of CESTAT, Delhi in ITM International Pvt. Ltd. v. Commissioner of Service Tax, Delhi 2017 (7) G. S.T. L.448 (Tri. – Del.), which interpreted the words “recognized by law for the time being in force” and which courses / qualification does get covered in it. Relying upon the decision of the Delhi High Court in the case of Indian Institute of Aircraft Engineering v. Union of India [34 Taxmann.com 191 (Delhi HC) = 2013 (30) S.T.R. 689 (Del.)], CESTAT has held that the expression “recognized by law” is a very wide one. It was further observed that besides Board’s circular No.107/01/2009-S.T., dated 28-1-2009 which interprets the term “recognized by law for the time being in force” to mean any degree/diploma/certificate specifically recognized by statutory authorities such as UGC/AICTE only; Association of Indian Universities (AIU) is also a statutory authority to determine the status of a Foreign university’s degree. If a degree is recognized by AIU then it is recognized by law. Accordingly, any degree, diploma or certificate issued by a foreign university or institutes recognized by AIU has to be treated as a certificate ‘recognized by law’ for the time being in force.

4.7. They also raised that the said issue stands discussed by the Hon’ble Delhi High Court in the case of Indian Institute of Aircraft Engineering v. Union of India [34 Taxmann.com 191 (Delhi HC) = 2013 (30) S.T.R. 689 (Del.)] wherein it was observed that the expression “recognized by law” is a very wide one and stand expression “recognized by law” is a very wide one and stands used by the Legislature in contra distinction to use the expression ‘conferred by law’ or conferred by statute. As such, any degree, diploma or certificate issued by a foreign university or institutes recognized by AIU has to be treated as a certificate ‘recognized by law’ for the time being in force. It is also seen that by Notification No. 43 (F 18-23/92-TD.V/TS-IV), dated 1-3-1995 for 2009-2010 attached as Appendix 6 HRD Ministry, Government of India has declared that the equivalence of degrees/diplomas awarded by AIU will be valid for the purpose of higher education as well as employment in India.

4.8. On the basis of the above, the applicant submits that since they are providing admission related services to universities which are approved by association of Indian Universities the same shall have to be considered to be `recognized by law’ in terms of GST law and exemption should be granted as per Notification 12/2017.

5. Comments of the Jurisdictional Officer:

The application was forwarded to the jurisdictional officer as per provisions of section 98 (1) of the CGST Act. The Jurisdictional officer has not submitted any remarks and hence it is presumed that the jurisdictional officer has no specific comments to offer. It is also construed that no proceedings are pending on the issue against the applicant.

6. Personal hearing:

The applicant was granted opportunity for personal hearing on 20.12.2023. Sri. Jijo Jose, FCA represented the applicant for personal hearing, which was conducted virtually. The representative reiterated the contentions made in the application and requested to issue the ruling on the basis of the submissions made in the application.

7. Discussion and conclusion:

7.1. We have carefully examined the statement of facts, the oral submissions made during virtual hearing. The issue to be decided is whether the services provided by the applicant in relation to admission to foreign universities are exempt under notification No: 12/2017 and the courses of Universities, which are members of Association of Indian Universities and Association of Common Wealth Universities, which have entered into memorandum of understanding for mutual recognition of Degrees or other qualifications offered is considered as recognized by law in India. Whether it is exempted in terms of entry at Si Nos. 66 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017.

7.2. The questions on which advance ruling is sought by the applicant falls within the purview of sub-section (2) of Section 97 of the CGST Act, 2017; i.e; applicability of a notification issued under the Act and whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term and hence admitted.

7.3. The applicant is an official representative of various foreign universities in UK, Canada, Australia, etc, and has recently started representing Universities in United Kingdom. The courses offered by them are graduate and post graduate courses only. These universities are recognized by Association of Indian Universities and they are also members of Association of Common Wealth Universities. The applicant receives remuneration in convertible foreign exchange from foreign universities and Institutions on the basis of students who join and pursue studies in the respective institutions.

7.4. The first question to be decided is whether the services provided by the applicant to the students in relation to admission to foreign universities are exempt under notification No: 12/2017. To determine the above issues the relevant portion of the Notification and the definition of the term “educational institution” has to be verified.

7.5. The relevant extract of the Exemption Notification No. 12/2017 CT(Rate) as amended by time to time reproduced herein below :-

7.6. Further, as per definition in 2(y)

“Educational institution” means an institution providing service 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

7.7. Thus, in view of the above, services relating to admission to educational institutions which impart education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force will be exempt from levy of GST. The crucial question to be decided then is whether the courses provided by the applicant’s foreign clients are part of a curriculum for obtaining a qualification recognised by any law for the time being in force.

7.8. The words “qualification recognised by any law for the time being in force” is not defined in notification No. 12/2017-CT Rate. However this issue is dealt with in CBIC Circular No. 117/36/2019-GST dated 11th October, 2019 regarding the exemption from GST on DG Shipping approved maritime courses conducted by Maritime Training Institutes of India. The Circular clarified that maritime training institutes and their training courses are approved by the Director General of Shipping which are duly recognised under the provisions of the Merchant Shipping Act, 1958 read with the Merchant Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014; and therefore, the Maritime Institutes are educational institutions under GST Law and the courses conducted by them are exempt from levy of GST. From the above it is clear that the intention of the law makers is for any course to be considered as education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force, the same is to be duly recognised under the provisions of an Act of the Union Government or the State Government. The courses conducted by the foreign universities are not conduced as per any Act of the Central or State Government. Hence, the courses conducted by foreign universities do not fall under the conditions specified in definition 2(y) of Notification 12/2017- CT Rate and hence, the activity of the applicant is not exempted under sl No: 66 of the above said Notification and Tax is to be paid by the applicant.

7.9. In this regard, a reference is to be made to the “Taxation of Services: An Education Guide” issued by CBEC in 2012, as the wording of the exemption under negative list of the service tax era is also the same viz., “education as a part of a prescribed curriculum for obtaining a qualification recognized by law for the time being in force;.” In this regard, para 4.12.9 reads as follows: “4.12.19 Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry?

No. To be covered in the negative list a course should be recognized by art Indian law.”

7.10. The applicant also claims that they are providing services in relation to admission to foreign universities approved by Association of Indian Universities. As the Australian Universities are approved by Association of Indian Universities the courses offered by them are also acceptable by law for the time being in force in India. In this regard it is observed that the claim of the applicant that Association of Indian Universities have recognised the courses conducted by foreign universities to which the applicant is providing admission related services is factually incorrect since the Association of Indian Universities do not recognise the courses conducted by the foreign universities. They only Issue Equivalence Certificate for the courses of foreign University to individual students. As per the AIU website (https://aiu.ac.in/evaluation.php) “AIU is vested with the power of according academic equivalence to the degrees obtained from the accreditedforeignBoards/ universities). Issuance of equivalence Certificate does not amount to recognising the course, as detailed in the paragraphs below. Further, the Association of Indian Universities is not a statutory body. It is only a society constituted under Indian Societies Act, 1860. The same is the case with Association of Common Wealth Universities. As per their official website (https://www.acu.ac.uk), they do not have a MOU as claimed by the taxpayer that the courses conducted by a member foreign university will be recognised by all the other member Universities of ACWU.

7.11. In this regard it is further observed that Hon’ble Supreme Court, vide its judgment in Civil Appeal No: 7602 OF 2023 (@ SLP (C) NO. 730/2022) dated 09.11.2023 in Ankita Thakur & Ors. v. H.P. Staff Selection Commission & Ors has interpreted the words “recognized educational institutions” as follows:

“In our view, if there existed a statutory procedure for granting recognition, an institution cannot be considered recognized dehors that procedure. No doubt, as held by a Constitution Bench of this Court in Mohammad Shujat Ali & Ors. vs. Union of India & Ors.27, issue of equivalence is a technical issue and where the decision of the Government is based on the recommendation of an expert body, the Court should not lightly disturb its decision unless it is based on extraneous or irrelevant considerations or actuated by mala fides or is irrational and perverse or manifestly wrong. But this is not a case of mere treating degrees or certificates obtained from a recognized Institution / University as equivalent to the one specified, rather it is of granting recognition to certain courses conducted by private institutes, whether recognized or not as per the extant statutory regime. This, in our view, amounts to changing the eligibility criteria midway because the extant Rules and the advertisement both stipulated that the diploma / specified course had to be from a recognized Institution / University. Even assuming that there had been no statutory procedure prescribed to accord recognition, such relaxation in the eligibility qualification ought to have been widely publicized, and opportunity should have been afforded to those who were left out, so that they could apply and compete, as held by this Court in Bank of India vs. Aarya K. Babu.”

The ratio of the above said judgment is squarely applicable in the instant case and recognition for a course is based on an act of the Central or State Government. Issuance of equivalence certificate cannot be considered as recognition given to the course. In view of the ruling by the apex court, the precedents cited by the applicant, being that of lower fora are not applicable.

Given the observations stated above, the following rulings are issued:

RULING

Question No. 1. Clarify whether the services in relation to admission to foreign universities are exempt under notification No: 12/2017 amended vide notification 2/2018.

RULING: The services in relation to admission to foreign universities provided by the applicant are not exempt under notification No: 12/2017 Central Tax (Rate) amended vide notification 2/2018- Central Tax (Rate).

Question No. 2. The courses of Universities which are members of Association of Indian Universities and Association of Common Wealth Universities which have entered into memorandum of understanding for mutual recognition of Degrees or other qualifications offered is considered as recognized by law in India.

RULING: No.