Clarification on applicability of GST on certain goods & services

Exemption of GST is provided to Services supplied to an educational institution including anganwadi (which provide pre-school education also), by way of serving of food including mid- day meals under any midday meals scheme, sponsored by Government irrespective of the funding of such supplies from government grants or corporate donations.

Exemption Entry –

Entry 66 clause (b)(ii) of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017

Services provided to an educational institution, by way of catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory.

Summary of the Circular –

As per above entry no 66, any catering service provided to an educational institution is exempt from GST. The exemption also includes mid- day meal service as specified in the entry. The scope of this entry is thus wide enough to cover any serving of any food to a school, including pre-school. Further, an Anganwadi interalia provides pre-school nonformal education. Hence, aganwadi is covered by the definition of educational institution (as pre-school)

Clarification –

It is clarified that services provided to an educational institution by way of serving of food ( catering including mid- day meals) is exempt from levy of GST irrespective of its funding from government grants or corporate donations [under said entry 66 (b)(ii)].

Conclusion –

Educational institutions as defined in the notification include aganwadi. Hence, serving of food to anganwadi shall also be covered by said exemption, whether sponsored by government or through donation from corporates.

Representations were received by CBIC for issuance of a clarification regarding applicability of GST on annuities paid for construction of road where certain portion of consideration is received upfront while remaining payment is made through deferred payment (annuity) spread over years.

SAC –

9954 – construction services of highways, streets, roads railways, airfield runways, bridges and tunnels

9967 – Service by way of access to a road or a bridge on payment of toll charges

Exemption Entry –

Entry 23 and 23A of principal exemption Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017

GST is exempt on service, falling under heading 9967 (service code), by way of access to a road or a bridge on payment of annuity [entry 23A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 ].

Heading 9967 covers “supporting services in transport” under which code 996742 covers “operation services of National Highways, State Highways, Expressways, Roads & streets; bridges and tunnel operation services”

Entry 23 of said notification exempts “service by way of access to a road or a bridge on payment of toll”.

Together the entries 23 and 23A exempt access to road or bridge, whether the consideration are in the form of toll or annuity [heading 9967].

Summary of the Circular –

Services by way of construction of road fall under heading 9954. This heading inter alia covers general construction services of highways, streets, roads railways, airfield runways, bridges and tunnels. Consideration for construction of road service may be paid partially upfront and partially in deferred annual payments (and may be called annuities).

Said entry 23A does not apply to services falling under heading 9954 (it specifically covers heading 9967 only).

Therefore, plain reading of entry 23A makes it clear that it does not cover construction of road services (falling under heading 9954), even if deferred payment is made by way of instalments (annuities)

Conclusion –

It is clarified that Entry 23A of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 does not exempt GST on the annuity (deferred payments) paid for construction of roads.

The services provided by way of examination including entrance examination, where fee is charged for such examinations, by National Board of Examination (NBE), or similar Central or State Educational Boards, and input services relating thereto are exempt from GST

SAC – 9992 – Services provided by or to an Educational Institution

Exemption Entry –

Entry 66(b)(iv) of principal exemption Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017

Services provided to an educational institution by way of – (iv) services relating to admission to, or conduct of examination by, such institution; upto higher secondary:

Summary of the Circular –

Clarification was sought in respect of taxability of various services supplied by Centre and State Boards such as National Board of Examination (NBE). These services include entrance examination (on charging a fee) for admission to educational institution, input services for conducting such entrance examination for students, accreditation of educational institutions or professional so as to authorise them to provide their respective services.

According to explanation 3(iv) of the Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 , “Central and State Educational Boards” are treated as Educational Institution for the limited purpose of providing services by way of conduct of examination to the students.

Therefore, NBE is an ‘Educational Institution’ in so far as it provides services by way of conduct of examination, including any entrance examination, to the students

Conclusion –

(i)   GST is exempt on services provided by Central or State Boards ( including the boards such as NBE) by way of conduct of examination for the students, including conduct of entrance examination for admission to educational institution [under S. No. 66 (aa) of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 ]. Therefore, GST shall not apply to any fee or any amount charged by such Boards for conduct of such examinations including entrance examinations.

(ii) GST is also exempt on input services relating to admission to, or conduct of examination, such as online testing service, result publication, printing of notification for examination, admit card and questions papers etc, when provided to such Boards [under S. No. 66 (b) (iv) of Notification no. 12/2017-Central Tax (Rate) dated June 28, 2017 ].

(iii) GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional ( accreditation fee or registration fee such as fee for FMGE screening test ) so as to authorise them to provide their respective services

Clarification is sought on whether services supplied to a Government Entity by way of construction such as of “a ropeway” are eligible for concessional rate of 12% GST under entry No. 3 (vi) of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017).

GST Rate  Notification –

Entry No. 3(vi) of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017)., GST rate of 12%

(vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above) provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

Summary of the Circular –

The entry No 3 (vi) does not apply to any works contract that is meant for the purposes of commerce, industry, business of profession, even if such service is provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity.

The doubt seems to have arisen in the instant cases as Explanation to the said entry states, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.

However, this explanation does not apply to Governmental Authority or Government Entity, as defined in clause (ix) and (x) of the explanation to said notification. Further, civil constructions, such as rope way for tourism development shall not be covered by said entry 3(vi) not being a structure that is meant predominantly for purposes other than business. While road, bridge, terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification, structures like ropeway are not covered by these entries too

Conclusion –

Works contract service provided by way of construction such as of rope way shall fall under entry at sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%

Clarification regarding applicability of GST on supply of service by State Govt. to their undertakings or PSUs by way of guaranteeing loans was sought.

Exemption Notification –

Entry No. 34A ofNotification no. 12/2017-Central Tax (Rate) dated June 28, 2017

Services supplied by Central Government, State Government, Union territory to their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the banking companies and financial institutions

Conclusion –

It is re-iterated that guaranteeing of loans by Central or State Government for their undertaking or PSU is specifically exempt under said entry No. 34A

Clarification has been issued regarding GST rate on parts of Sprinklers or Drip Irrigation System, when they are supplied separately ( i.e. not along with entire sprinklers or drip irrigation system).

GST Rate  Notification –

Serial No ‘195B’ under Schedule II of Notf No. 1/2017- Central Tax (Rate), dated 28th June, 2017 vide Notf No. 6/2018- Central Tax(Rate), dated 25th Jan, 2018 –

Conclusion –

The intention of this entry has been to cover laterals (pipes to be used solely with sprinklers/drip irrigation system) and such parts that are suitable for use solely or principally with ‘sprinklers or drip irrigation system’, as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN.

Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which are classifiable under heading 8424, would attract a GST of 12%, even if supplied separately.

Any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract GST as applicable to the respective heading