Over View – ‘Consideration’

Consideration in GST is the basis for deciding upon the value of supply of goods or supply of services.

Section 2(31) ‘considerationin relation to the supply of goods or services or both includes––

(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;

(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:

Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;

Advance Rulings

M/s Emerald Heights International School Case Number : 11/2019 Order Dated : 20/08/2019 Order No. : 13/2019 Authority: AAR (Madhya Pradesh)

1) Questions sought by the applicant:

a) Will the consideration received by the school and staff in the conference would exempted under entry No. 66 or Entry No. 1 or Entry No. 80 or any other entry of the notification No. 12/2017 – Central tax (Rate) or will be chargeable to GST under CGST Act, 2017″

2) Submission of the applicant :

i) Emerald Heights School Samiti is a registered Society (hereinafter referred as “Society” ) for the promotion of education and registered under M.P. Socities Act 1971 bearing reg. no 10981 and is also registered as a Charitable institution under section 12AA of the IT Act 1961.

ii) The Applicant and the association intend to enter inta an agreement (Proposed Agreement) for hosting and managing the conference /gathering. The Proposed agreement clearly mentions that the school shall act as Host of the Conference in its own right as Principal and shall not be deemed to be acting as an agent of the Association.

iii) As per the proposed agreement, the applicant is responsible to hold the conference engaging appropriately skilled, trained and experienced personnel and sufficient financial and material resources. This shall include planning the conference, Inviting the participant, arranging the accommodation, food etc. organizing and managing the events in the conference etc.

iv) Consideration for performing the above functions to cover the expenses of the conference would flow from the Round Square members schools ( many of such members schools are based outside India) in the form of fee along with the list of individual student and staff attendees to the applicant no surplus is expected to be generated from the Conference, Surplus, if any, shall be transferred back to the association.

3) Further Submission of the applicant :

i) Services provided by an educational institution to its student , faculty, and staff are exempt under the GST Law.

In this context , the entry 66 of the Notification No. 12/2017- Central tax which has been exempted from the GST.

“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 Government.

iii) security or cleaning or house- keeping services performed in such educational institution.

iv) services relating to admission to, or conduct of examination by, such institution

For the purpose of the entry , the educational institution has been defined under the clause 2(y) of the Notification No. 12/2017 – Central Tax

“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 recognised by any law for the time being in force iii) education as a part oa an approved vocational education course.

In the present case, the applicant would be organizing a conference for the students over a period of six- seven days during the time period from 16/09/2019 To 13/10/2019. The attendees of the conference would include students and teachers of the applicant school as well as the students and teachers of the applicant school as well as the students and teachers from different schools who are members of the “Round Square”. The objective of the conference is to bring to india students and teachers from up to 200 schools in 50 countries around thw world – the majority of them registered charities to allow for the students leadership and creativity while ensuring the individual development of every pupil including academic, Physical , Cultural and Spiritual aspects in a global perspective and also to develop their cultural understanding, debate topical issues that sensitise them to community they are visiting , forge freinfship, carry out social service and develop mind, body and soul through a range of culturally immersive experiences including Local expedition, Sporting activities, and mindful practices, most especially a daily programme of yoga.

Accordingly, the services under the agreement are practically the services to be provided by an educational institution to the student and hence , merit exemption under entry 66 of the Notification No. 12/2017-CT(Rate)

iii) The services of educative conference to be provided by the Applicant to the students would merit consideration under the service category of “Education Services”

ii) Services by an entity registered under section 12AA of the income Tax Act by way of Charitable activities are exempt under the GST Law.

iii) Services by way of training or coaching in recreational activities relating to –

a) Arts or Culture or

b) Sports by charitable entities registered under section 12AA of the Income Tax Act. are exempt under GST law.

4) Findings and discussion- As per concerned officer:

1) We have carefully considered the submission made by the applicant in the application and during the time of personal hearing:

2) After going through the provision of Act/ Rules/ Notification it is clear that Supply of all services to an educational Institution are not exempt. Only the specified services are exempt. For example, even the entrance examination conducted by an Educational Institution will not be exempt , if there is no specific clause for its exemption.

3) Similarly, supply of services pertaining to transportation of students, facility, and staff is exempt only because of eligibility of an Educational Institution for exemption for educational services for pre-school education and education up to higher secondary school or equivalent.

4) Supply of services to an educational institution for any purpose , say for education beyond higher secondary level, shall not be exempt.

Entry I is pertaining to Service by an entity registered u/s 12AA of the income Tax Act 1961 by way of charitable activities. This clause is not applicable to the proposed activities to be carried on by the applicant, as the School is not an entity registered u/s 12AA of I.T. Act for Charitable Activiites.

Ruling

The consideration received by the school from the participant schools for participation of their students and staff in the impunged conference would not be exempted under enrtry No. 66 or entry No. 80 or any other entry of the Notification No. 12/2017-CT(Rate) or will be chargeable to GST under CGST Act, 2017 & MP GST Act 2017 or IGST ACT,2017 ? and concurrent notification issued by the State Tax authorities.

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