In re Resonance Eduventures Limited (GST AAR Rajasthan)
Q.1: Applicant (REL) is supplying services of coaching to students which also includes along with coaching, supply of goods/printed material/test papers, uniform, bags and other goods to students. Such supplies are not charged separately but a lump sum amount is charged, the major component of which is imparting of coaching.
In such situation, whether such supply of coaching services shall be considered, a supply of goods or a supply of services?
Ans.1: In the present case, the supply is a mixed supply of goods as well as services and attracts highest rate of tax @ 18% (i.e. 9% CGST+ 9% SGST or 18% in case of IGST).
Q.2: If the answer to the aforesaid first question is a supply of service, the applicant would like to know whether such supply of coaching services shall be considered as composite supply under section 2(30) of CGST Act, 2017? If yes what shall be the principal supply as per section 2(90) of CGST Act, 2017?
Ans.2: In the present case, the supply is a mixed supply of goods as well as services under Section 2(74) of GST Act, 2017 and attracts highest rate of tax @ 18% (i.e. 9% CGST+ 9% SGST or 18% in case of IGST).
Q.3: Applicant provides coaching services under a new business model through channel / Network Partners as per sample agreements attached, containing obligations of Applicant (REL) and such channel / Network partners. According to agreement, the channel / network partner provides the services to the students on behalf of Applicant. In such a situation, who shall be considered as supplier of coaching (REL) service and recipient of such service under the agreement?
Ans.3: In the present case, Applicant will be supplier of mixed supply to the students and Network partner will be supplier of service to the applicant. The place of supply in both the cases (i.e. mixed supply to the students and supply of service to the applicant by the channel/network partner) would be determined as per Section (1) of Section 10 of the IGST Act, 2017 in respect of supply of goods and as per clause (b) of sub section (2) of Section 12 of the IGST Act, 2017 in respect of supply of service, as the case may be.
Q.4: Based upon above questions, what shall be the value of service provided by Applicant (REL) to students and by channel / network partner to Applicant (REL)?
Ans.4: Total consolidated amount charged for which Tax invoice issued by the applicant to the student shall be the value of mixed supply by the applicant following the respective arrangement under section 15 of the CGST Act, 2017.
Q.5: Whether the Applicant (REL) shall be eligible to avail Input Tax Credit (ITC) for the supplies?
Ans.5: -Yes, as per Section 16 of the CGST Act, 2017, the applicant shall be eligible to take ITC of the GST paid on goods or services used or intended to be used in the course or furtherance of business subject to the conditions as prescribed and the provisions of the Section 17 of the CGST Act, 2017.
Read AAAR Order: Coaching Service with Goods is Composite Supply & not mixed supply: AAAR
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, RAJASTHAN
Note: Under Section 100 of the CGST/RGST Act, 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/RGST Act, 2017, within a period of 30 days from the date of service of this order.
At the outset, we would like to make it clear that the provisions of both the CGST Act and the RGST 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 RGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / RGST Act would be mentioned as being under the “GST Act”.
The issue raised by M/s Resonance Eduventures Limited, A46 and 52, CG TOWER IPIA, Near City Mall, Jhalawar Road, Kota-324005, RAJASTHAN (hereinafter the Applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a), (c) & (d) given as under: –
(a) Classification of any goods or services or both; (c) determination of time and value of supply of goods or services or both, and (d) admissibility of input tax credit of tax paid or deemed to have been paid
Further, the applicant being a registered person (GSTIN is 08AADCR5581M1ZT) as per the declaration given by him in Form (ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling.
A. SUBMISSION OF THE APPLICANT: (in brief)
The applicant is registered under Goods and Service Tax under the categories of “Commercial Training or Coaching Centre Services” and Advertising Agency’s Services” of the CGST Act, 2O17.The applicant has been providing coaching services under the physical classroom mode but now due to Covid environment, it is shifting its business model through i emote channel partner network.
> The applicant provides coaching services to its enrolled students under its supervision through Network partner.
> The applicant has appointed / is in the process of appointing Network Partner in different cities/towns (both within Rajasthan and outside Rajasthan) for rendering and providing, on principal-to-principal basis, training /coaching and other related ancillary functions/services for the courses decided by applicant to its enrolled students.
> The applicant shall provide study material and student kit which will include test paper, printed material, uniform, bags and other goods.
> The applicant will also decide the schedule of course, schedule of method of teaching, training/coaching and education to the students.
> Students enrolled with the applicant will be charged a lump sum consolidated amount which will be all inclusive and include the supply of goods and I or services, i.e., service of coaching and other supply of related goods like bag, uniform etc.
> Applicant will raise tax invoice to students who wishes to enrol with the applicant for coaching services.
> Network Partner shall be under obligation to carry out/conduct course classes offered by the applicant at its premises for the students enrolled with the applicant (REL).
> Network Partner shall be required to engage qualified, experienced and competent faculty for teaching the courses offered by the applicant.
> Fees collected from the students will be deposited in an agreed Escrow account with a bank.
> For subject coaching services provided to applicant, Network Partner will issue an invoice of coaching charges to the applicant for the services provided.
> Following diagram indicate (a) the business arrangement and (b) flow of payment against tax invoice:
Actual details of activities between applicant and its students
Business Arrangement
Flow of tax invoice – payment
1. The salient features of the agreement made between Applicant and Network Partner, are as follows:-
A. Obligations of Channel / Network Partner:-
(i) Conducting courses offered by applicant at its premises for registered students of applicant as per guidelines of applicant.
(ii) At its own cost and expense, maintaining adequate number of qualified, experienced and competent faculties for teaching Physics, Chemistry, Biology, Mental ability, Mathematics and other subjects as per requirements of the courses.
(iii) Conducting periodical tests in respect of the courses and check answer books for performance evaluation of the students.
(iv) Selling registration / admission forms, getting the admission forms filled, collecting the courses fees and maintaining records of enquiries, admission packets sale, students enrolled with applicant without any delay. Deposit of collection towards registration / admission and course fee from enrolled students in the designated bank account.
(v) Providing facilities and infrastructure for smooth conduct of courses such as AC class rooms, black / white board, drinking water, furnished computer lab, staffroom, supporting staff etc.
(vi) Offering fee discount as per resonance policy.
(vii) Marketing of courses
(viii) Providing premises / campus as per requirement
(ix) Local advertisements
B. Obligations of Applicant (REL):-
(i) Facilitate / assist in appointing the faculty academic man power in consultation and approval of the network / channel partner.
(ii) Preparing and providing-
(a) high quality printed study materials,
(b) soft copy of examination papers,
(c) soft copy of course planners, and
(d) soft copy of annual s
(e) schedule or any changes in any of the above papers.
(iii) To provide Student Kit’ and all other committed deliverables to all registered students
(iv) Communicating in time any changes in any of study material, student kits, examination papers, course planners, and annual schedule or any changes in any of the above
(v) Deciding schedule of courses, schedule of methods of teaching, training / coaching and education to the students, undergoing training / coaching with the object of not only facilitating success in targeted competitive examination but also build selfconfidence to face stiff standards set for competitive examinations;
(vi) Conducting motivational, counselling and conducting an ‘Inhouse Career Orientation Session(s) or Seminar(s)’ at the said Premises during the course.
(vii) To plan and run national marketing campaign for various courses.
C. Applicant shall issue tax invoice to the students who wishes to enroll with Resonance Eduventures Limited (REL), of a consolidate amount (which includes coaching services and other related goods such as bag, uniform, books etc.) which may be collected by the network partner and deposit the same in the escrow bank account.
D. The Channel / Network Partner is required to collect all fees from the registered students in timely manner and shall deposit in designated Escrow bank account as per agreement and such account shall be operated as decided in the agreement,
E. Channel Network Partner shall raise tax invoice for service charge to the applicant for its coaching services (and other related managerial/ business other related ancillary services) in relation to various offline/online Courses of the applicant (REL).
2. The applicant has appointed or is in the process of appointing various Channel/Network Partners in different parts of the country in view of the tact it is already presently providing services across the country. As such, the appointed Channel / Network Partners will he both, within the State of Rajasthan and outside the State of Rajasthan. This will involve both inter-State and intra-State transactions. As per the present GST law, for inter-State transactions. IGS1 will be levied and for intra-State transactions, both CGST and RGS1 will he applicable. This application therefore, is intended to seek advance ruling covering both types of transactions.
3. Additional information submitted by the applicant is as under:
