In re IL & FS Education and Technology Services Ltd. (GST AAR Maharashtra)
Question 1. Determining applicability of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate), dated the 28th June 2017 read with Entry No. 72 of Notification No. 12/2017-State Tax (Rate) dated 29.06.2017 to the services provided by the Applicant under the Information and Communication Technology (ICT) @ School Project.
Answer:- Answered in the negative. The supply of goods and services as made by the applicant under Information and Communication Technology (ICT) @ School project is not in compliance of all conditions of GST exemption Notification No. 12/2017-Central Tax (Rate), dated the 28th June 2017 read with Entry No. 72 of Notification No. 12/2017-State Tax (Rate) dated 29.06.2017.
Also Read AAAR Ruling- Supply to Director of Education (S & HS) qualifies for GST exemption
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by IL&FS Education and Technology Services Ltd., the applicant, seeking an advance ruling in respect of the following question:-
The present Advance Ruling Application is for determining applicability of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 read with Entry No. 72 of Notification No. 12/2017-State Tax (Rate) dated 29.06.2017 to the services provided by the Applicant under the ICT @ School Project.
At the outset, we would like to make it clear that the provisions of both the CGST Act and the SGST 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 provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.
02. FACTS AND CONTENTION – AS PER THE APPLICANT
The submission (Brief facts of the case), as reproduced verbatim, could be seen thus –
Brief relevant facts:
1. IL&FS Education and Technology Services Ltd. (“Applicant”) is a public limited company incorporated in India and registered under the Companies Act, 1956. The Applicant having GSTIN 27AABCI2106H1ZO is registered in Mumbai, Maharashtra and falls within the jurisdiction of Mumbai Nodal Division-5, Maharashtra. The Applicant is the social infrastructure arm of IL&FS group and is engaged in the key areas of education, skill development, healthcare and cluster development for long term and sustainable impact.
2. Inter alia, the Applicant is working with various State or Union Territory Governments to promote computer training among the students and teachers of the government and government aided higher secondary schools under the Information and Communication Technology (‘ICT’) @ School Project (hereinafter referred to as “ICT Project”).
Overview of ICT Project
3. Information and Computer Technology (ICT) is universally acknowledged as an important tool for improving the quality of education. Realizing the importance of ICT and the vital role that it plays in educational sector, the Government of India framed nationwide policy viz. National Policy on Education, 1986 (as modified in 1992) (hereinafter referred to as the old policy), which stressed the need to employ information technology to improve the quality of education. Also, a number of different schemes such as Computer Literacy and Studies in School (CLASS) and Educational Technology (ET) were introduced under the old policy to promote computer literacy in India.
4. Subsequently, the Ministry of Human Resource and Development, Government of India, revised its old policy keeping in view past experience, the feedback which had been received and changing needs. Thus, a nationwide Information and Communication Technology in Schools (‘ICT in Schools’) Scheme was introduced to replace the existing ET and CLASS schemes. Thereafter, in the year 2012, Department of School Education and Literacy framed nationwide guidelines under National Policy on ICT in School (hereinafter referred to as the new policy) for implementation of ICT in School Scheme
5. ICT in Schools visions to transform all the Government and Government aided schools into smart schools, where each school should have a computer lab and students are provided with premier computer training. In addition to computer training, ICT in Schools also provide for encouragement of usage of digital medium to impart education in other subjects and to create capability in terms of teaching staff enabling the schools to fully implement ICT in Schools.
Mode of Implementation
6. As discussed above, this new policy framed by the Central Government endeavors to provide guidelines to assist the States in optimizing the use of ICT in school education within a national policy framework. As per the guidelines in the new policy, the Central Government provides that for effective implementation of ICT Projects, the State or Union Territory Governments may consider entry of private partners in various aspects of the ICT Project by adopting the Build, Own, Operate and Transfer (BOOT) model to avoid out of date/obsolete equipment in schools. Thus, the new policy lays emphasis on the Public-Private Partnership (PPP) in the implementation of ICT Projects.
7. It is to be noted that ICT in Schools scheme is a collaborative venture between the Central and the State or Union Territory Governments which actively solicits the partnership between the Governments for the effective implementation of ICT Projects. Under this scheme, the State Government or Union Territory Government shall be responsible for defining norms, standards, guidelines and framework to facilitate and monitor the implementation of the scheme in an effective manner. Thus, primary responsibility of implementing ICT Projects is on the State or Union Territory Governments.
8. However, while framing the policy, standards, norms, etc. for implementation of ICT Projects, the State or Union Territory Governments would be guided by the national level policy framed by the Ministry of Human Resource and Development, Government of India. This is to ensure uniform and high standards, optimum utilization and cost-effective implementation of ICT Projects. Thus, the State and Union Territory Governments have to implement ICT Projects in accordance with the guidelines issued by the Central Government in this regard.
9. As the State or Union Territory Government is required to implement ICT Projects in accordance with the guidelines issued by the Central Government, almost all states have been following the PPP model by sourcing out the ICT Project work to the private parties under the BOOT model (as suggested by the Central Government).
10. Thus, as a matter of fact, throughout the nation, the States are adopting the BOOT model to implement ICT Project in schools. In fact, the Applicant is also implementing such ICT Projects on BOOT model basis in various states viz. Odisha, Maharashtra, West Bengal, etc.
ICT Project in the State of Maharashtra
11. The present application concerns one such ICT project being implemented by the Applicant in the State of Maharashtra. The Director of Education (Secondary and Higher Secondary), Maharashtra State (hereinafter referred to as DE(S&HS) had invited tender vide tender notice no. 11 on e-tendering sub-portal of Directorate of Primary Education to implement ICT project in 5000 government secondary and higher secondary schools in ten identified regions in the State of Maharashtra.
12. The said tender was for the supply of computer hardware, software and connected accessories along with the site preparation (i.e. vinyl flooring, furniture and fixtures, electrical fittings, power backup facilities, LAN, etc.), maintenance of equipment and provision of computer training services for 5 years in 5000 schools divided in 10 zones on the BOOT Model basis.
13. The Applicant was selected vide Letter of Award accepted on March 26, 2013 to execute the contract in 3 zones i.e. 1590 schools. Accordingly, the Applicant entered into an agreement with DE(S&HS) on 13th November, 2013 (hereinafter referred to as “the agreement”).
Activities to be undertaken by the Applicant
14. In terms of the agreement, DE(S&HS) would arrange the necessary’ minimum constructed rooms/space in each school for setting up computer labs and the Applicant would carry out the necessary work viz. flooring, furniture and fixtures, etc. for preparing each site to be used as an ICT lab.
15. Further, as per the specifications laid down in the Annexure-I and Annexure-IA to the agreement and the decision of the technical committee, the Applicant would procure the requisite number of IT equipment i.e. Computers, Printers, Scanners, etc. The equipment so procured would be installed and commissioned by the Applicant in the ICT lab prepared in schools. All these activities i.e. site preparation, installation and commission are to be completed by the Applicant in the time prescribed in the agreement i.e. within 120 days from the date of handing over of the sites by DE(S&HS).
16. Once the labs are ready, the Applicant shall operate the same for imparting computer training. For this, the Applicant is required to provide one teacher, having specified qualifications and experience, to each school. The teachers so appointed would utilize the available ICT infrastructure (i.e. the ICT lab so created by the Applicant) for imparting computer training to the students in accordance with the curriculum developed in this regard by the Director, Pune as per Annexure-III to the agreement.
17. Annually, the appointed teacher shall also impart necessary training to at least 5 school teachers including the headmaster/headmistress of the school in computer aided learning and computer education with the usage of available ICT infrastructure. Further, the applicant shall impart technical training to the subject teachers for a period of ten days per year for normal operation, installing and use of textbook based educational software, computer education software, additional educational software, school management software, common software applications.
18. Moreover, it is also the responsibility of the Applicant to maintain and upkeep the ICT labs in proper working conditions for the entire contract period at its own cost. For this, the Applicant would have to provide requisite manpower to carry out the necessary repairs as and when required within the time limit prescribed in the agreement. Besides, the Applicant would also appoint a help desk which will serve as a single point of contact for all ICT related incidents and service requests. Further, the Applicant shall also provide 1 District coordinator for each district and 1 Project manager for a region for project management & monitoring which would coordinate with the Government of Maharashtra.
19. In terms of the agreement, all the above-mentioned activities are to be carried out for a total consideration of Rs. 284,61,00,000/- (Rupees Two hundred and eighty-four crores sixty-one lakhs only) which would be payable in installments (throughout the period of contract) on completion of the activities as detailed in Para 7.1 of the agreement.
20. After the expiry of the contract period (i.e. 5 years), the entire infrastructure (supplied and installed) will be transferred to DE(S&HS) at a nominal value of Re. 1/-.
STATEMENT CONTAINING APPLICANT’S INTERPRETATION OF LAW AND/OR FACTS. AS THE CASE MAY BE, IN RESPECT OF THE QUESTION(S) ON WHICH ADVANCE RULING IS REQUIRED.
APPLICANT’S ELIGIBILITY FOR ADVANCE RULING:
21. That Section 97 of the Central Goods and Service Tax Act, 2017 (hereinafter, referred to as ‘CGST Act’), entails that advance ruling may be filed by an applicant on following questions:-
a. Classification of any goods or services or both;
b. Applicability of a notification issued under the provisions of this Act;
c. Determination of time and value of supply of goods or services or both;
d. Admissibility of input tax credit of tax paid or deemed to have been paid;
e. Determination of the liability to pay tax on any goods or services or both;
f. Whether applicant is required to be registered;
g. Whether arty 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.
22. The Applicant submits that the issue on which advance ruling is sought in the instant matter relates to the applicability of SI. No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 under CGST Act to the services provided by the Applicant. The questions relating to applicability of a notification issued under the CGST Act, 2017 are eligible to be posed for advance ruling before the Advance Ruling Authority in terms of Section 97(2)(b) of the CGST Act, 2017. Hence, present advance ruling application is maintainable before the Hon’ble Authority of Advance Ruling.
ISSUE(S) REQUIRING ADVANCE RULING:
23. The Applicant submits the following question for Advance Ruling and their interpretation on the question is as under:
a. Whether the services provided by the Applicant to the Government secondary and higher secondary schools under the ICT Project, are covered under the scope of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (hereinafter referred to as “Notification No. 12/2017“)?
Applicant’s understanding:
24. In the understanding of the Applicant, the activities undertaken by the Applicant under ICT project would be covered under the scope of Entry 72 of Notification No. 12/2017, for the reasons furnished herein below:
Applicable provisions:
25. Notification No. 12/2017 provides for the exemption for intra-State supply of services of description as specified in column (3) of the Table, from so much of the Central Tax leviable thereon under sub-section (1) of section 9 of the CGST Act, as is in excess of the central tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5).
26. For quick reference, Entry No. 72 of the Notification No. 12/2017 is reproduced herein below:
