In re Muniyasamy Abhinaya (GST AAR Tamilnadu)
In a recent ruling by the Authority for Advance Ruling (AAR) in Tamilnadu, the GST applicability for school transport services was examined. The case involved Smt. Muniyasamy Abhinaya, an individual proprietor planning to provide transportation services exclusively to students and staff of certain schools. This article delves into the AAR’s decision and its implications.
Detailed Analysis:
GST Applicability: The primary question was whether GST would apply to the transportation services offered by the applicant. It was clarified that the services would be exclusively provided to students and staff of higher secondary schools under agreements with the schools. Importantly, the bus and van permits would be in the name of the respective schools. The AAR referred to Notification No. 12/2017-Central Tax (rate) dated 28.06.2017, specifically SI.No.66(b). This provision exempts transportation services provided to educational institutions, provided the institution is up to the higher secondary level or equivalent. As the applicant’s services fall within this exemption criteria, they are exempt from GST.
Payment Collection: The ruling addressed the collection of transportation charges from parents. Since the services were exempted from GST, the fees collected directly from parents for picking up and dropping off their children were also not subject to GST.
Agreements with Schools: It’s worth noting that the ruling didn’t examine the specific agreements between the applicant and the schools since the entire activity was still in the proposal stage. However, the AAR emphasized that for the exemption to apply, the services must be provided under agreements with educational institutions and the necessary permits must be obtained as per the Tamilnadu Motor Vehicles (Regulation and Control of School Buses) Special Rules 2012.
Conclusion:
In conclusion, the AAR ruling in Tamilnadu clarifies that transportation services exclusively provided to students and staff of higher secondary schools, with permits in the school’s name, are exempt from GST under SI.No.66(b) of Notification No. 12/2017-Central Tax (rate) dated 28.06.2017. This exemption extends to the fees collected directly from parents. However, it’s crucial to have proper agreements in place with educational institutions and adhere to relevant regulations for this exemption to apply.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TAMILNADU
Smt. Muniyasamy Abhinaya, No. 16-2, Nehru Street, Thalambur, Kancheepuram District, Pincode – 603 103, (hereinafter referred to as the Applicant) is an individual (Proprietorship) and an unregistered person with GST. The Applicant has a proposal to provide pick up and drop (transport) service only to the students and staff of certain schools and not for general public.
2.1. The Applicant has submitted a copy of challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017.
2.2 The applicant has registered as an unregistered applicant in GST portal on 09.02.2023 for filing advance ruling application under the category of service provider. The Applicant had enclosed a letter dated 03.02.2023, addressed to the Commissioner, wherein she had stated that she was approached by few schools in Chennai to provide transport service i.e. pick up and drop of their school children; This transport service will be operated by providing school bus/van service only to the students studying in respective schools and not for general public. She also stated that payment of fees will be collected directly from the parents of the students as per advice and agreement with school. She further stated that the teachers and staff will also be picked and dropped en-route for which the school will pay. Further the bus/van permits will be in the name of the respective school only.
2.3. The Applicant has sought Advance ruling on the following questions:-
a. Whether GST applicable on the above said service?
b. Whether the collection of transportation charges from parents will be taxed or exempted under GST, since only school students are only picked up and dropped, and school staff which will be covered in the agreement with school?
c. If GST applicable, then what is the percentage of GST to be charged from parents and school?
2.4. The applicant has not submitted any statement containing interpretation of law and / or facts in respect of the questions raised. However, the applicant has submitted a letter containing relevant facts having a bearing on the questions raised.
3.1 The applicant, after consent, was given an opportunity to be heard in person on 09.08.2023. The applicant, Ms. Abinaya, appeared before the authority and reiterated the submissions made in the application. The applicant, further, stated that –
