CA, CMA coaching services are not exempted from GST

Under GST, Supply is considered a taxable event for charging tax. The liability to pay tax arises at the ‘time of supply of goods or services’. Thus, determining whether or not a transaction falls under the meaning of supply is important to decide GST’s applicability. The GST council has fitted over 1300 goods and 500 services under four tax slabs of 5%, 12%, 18% and 28% under GST. Certain supplies which are covered under Notification No.12/2017- Central Tax (Rate) Dated 28-06-2017 as amended by the Notification No.02/2018-Central Tax (Rate) dated 25-01-2018 are exempted from the levy of GST (i.e no GST will be charged on such supplies).

According to Entry 66 of the above notification, certain educational services are exempted under GST. In terms of Entry 66 are coaching services provided to enable the students to appear for the examinations conducted by the respective statutory bodies i.e., Intermediate (Higher Secondary Education), Chartered Accountancy Course and Cost Management Accountancy and to obtain the necessary qualifications exempt under GST? A similar issue was raised before the Andhra Pradesh Advance Ruling  Authority (AAR) by M/s Master Minds.

Facts of the Case:-

• The applicant is a proprietary firm and a leading educational institution providing coaching to students for chartered Accountancy certificate (CA), Cost and Works Accountancy Certificate (ICWA) and Intermediate Certificate.
• The coaching provided by the applicant enables the students to appear for the examinations conducted by the respective statutory bodies i.e., Intermediate (Higher Secondary Education), Chartered Accountancy Course and Cost Management Accountancy and to obtain the necessary qualifications.
• The applicant’s registration with service tax department was migrated to GST under GST Act.

Issues raised in the Application:-

The applicant filed the present application seeking a ruling on the following issues:

1. Whether the ‘supply of service of education’ to the students of the applicant for obtaining qualifications/ certificates of CA Foundation, CA-Inter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate duly recognized by the respective statutory authorities/ government are exempted under Notification No. 12/2017-Central Tax dated 28.06.2017 (entry no.66(a)), as amended?
2. Whether the charges collected by the applicant for catering service by supplying food to the students undergoing the above courses are exempted from GST as provided under Notification No. 12/2017-Central Tax dated 28.06.2017 (entry no.66(a)), as amended?

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Observations by AAR regarding the Provisions of Law

• The issues raised by the applicant before AAR, was under litigation since long under the service tax regime as narrated by the applicant in the application.
• Though AAR was not concerned with the issues under litigation under the service tax regime, with the identical exemption provided for educational services both under the service tax regime and GST regime and identical issues being presented before the Central Tax authorities in the past, AAR wished to discuss the proceedings under the service tax regime without ignoring the past history.
• The service of training or coaching in educational activities provided by an educational institution is granted exemption from service tax by way of amendment to Notification No.25/2012-ST vide entry no 9.
• According to entry 9 the following services provided are exempt
• by an educational institution to its students, faculty and staff
• to an educational institution, by way of
• transportation of students, faculty and staff
• catering, including any mid-day meals scheme sponsored by the Government
• security or cleaning or house-keeping services performed in such educational institution
• services relating to admission to, or conduct of examination by such institution;
• The said Notification No. 25/2012-ST defined an ‘educational institution’ as an institution providing services by way of:
• pre-school education and education up to higher secondary school or equivalent
• education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force
• education as a part of an approved vocational education course
• Similar exemption granted under negative tax regime of service tax was extended to the educational services in GST regime also.
• Entry no.66 of Notification No. 12/2017-Central Tax dated 28.06.2017 as amended by Notification No. 2/2018-Central Tax (Rate) dated 25.01.2018, specifies the following education services as exempted from GST. Services provided:-
• by an educational institution to its students, faculty and staff
• by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee
• to an educational institution, by way of,-
• transportation of students, faculty and staff
• catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory
• security or cleaning or housekeeping services performed in such educational institution
• services relating to admission to, or conduct of examination by, such institution; upto higher secondary
• As per Notification No. 12/2017-Central Tax dated 28.06.2017 “educational institution” means an institution providing services by way of,-
• pre-school education and education up to higher secondary school or equivalent
• education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force
• education as a part of an approved vocational education course;

Whether services provided by applicant are taxable under GST?

• In the instant case, the coaching or training service provided in respect of the courses pertaining to CA (Inter & Final) and ICWA (Inter & Final) does not fall under point (a) of the above definition under GST, as the same is not related to pre-school education and education up to higher secondary school or equivalent.
• Similarly, the service provided by the applicant also does not fall under point (c), as the same is not related to imparting of education as a part of an approved vocational education course (which is generally a non-academic course and a specific trade / vocation oriented course).
• While examining whether the service falls under point (b) or not, it is noticed that:
• The applicant is not accredited or affiliated or recognized or authorized by ICAI or ICWAI or it had any Partnership or MOU with statutory bodies viz., ICAI & ICWAI for imparting coaching or training relating to the courses recognized by these bodies.
• These statutory bodies are themselves offering ‘coaching and training classes’ to the aspirants through their Regional Councils or Branches or certain accredited private colleges / institutions.
• They impart training in tune with the curriculum prescribed by the above said statutory bodies.
• On the other hand, the applicant is offering variety of coaching and training courses (regular, crash courses, revision exam courses etc.,) with different structures of fee, curriculum and options to the aspirants of CA and ICWA.
• This gives an option to the aspirants to choose a particular coaching and training of a particular course or group or subject and join in such a particular course.
• The applicant is not issuing any ‘coaching completion certificate’ or ‘any study certificate’ in respect of CA & ICWA Courses.
• Coaching or training in applicants coaching Centre is not a mandatory compliance for an aspirant in pursuing their study and obtaining certificates from ICAI & ICWAI.
• The student is at liberty to discontinue coaching from the applicant’s coaching centre (at the cost of financial loss, but not at the cost of academic loss) and continue his study on his own or from such other coaching centre in the course of pursuance of being conferred with Inter or Final Certificate by the above said statutory bodies
• Therefore, the service provided by the applicant to the aspirants of CA (Inter & Final) and ICWA (Inter & Final) does not ensure that the student obtains a qualification recognized by any law and hence the same does not fall under point (b) of the definition given to ‘Educational Institution’.
• In the instant case, the coaching or training provided by the applicant is for preparing the students for writng/appearing CA(Inter & Final) and ICWA (Inter & Final) Exams conducted by ICAI/ ICWAI.
• The said coaching or training per se does not lead to grant of a certificate or diploma or degree or qualification which is recognized by any law.
• It only aims at giving a better preparation to the students and improves their chances in the examination.
• Further, it is pertinent to mention that the coaching or training as imparted by the applicant is neither mandatory to the students appearing for CA / ICWA examination. Students, who prepare on their own, can also appear for these examinations and qualify, basing on their performance.
• Hence, the coaching or training imparted by the applicant is only a facilitation / improvisation of the preparation for the said exams and cannot be considered as a coaching/training leading to grant of certificate, qualification etc. recognized by law.
• More importantly, with regard to Chartered Accountancy course, for obtaining the recognized qualification as Chartered Accountant, apart from qualifying in the examinations (CPI, Inter, Final), there are various prescribed and mandatory conditions and requirements to be fulfilled by the students/candidates.
• The governing bodies (i.e., Board of Studies) of ICAI and ICWAI have formulated eligibility requirements for issuance of certificates by them.
• The Skill courses viz., Integrated Course on Information Technology and Soft Skills (at CA intermediate level) and Advanced Integrated Course on Information Technology and Soft Skills (at CA Final level) are conducted / offered by the statutory bodies of ICAI and ICWAI through their Regional Councils / Branches only and accordingly issue certificates.
• Therefore, the coaching or training service provided by the applicant to the aspirants of CA-Foundation, CA-lnter, CA-Final, CMA (ICWA)-Foundation, CMA Inter, CMA-Final and Intermediate is not the service provided by means of ‘education as a part of curriculum that has been prescribed for obtaining a qualification prescribed by law.
• Hence it cannot be said that the coaching / training given by the applicant to CA aspiring students (for appearing and qualifying in the examinations) would lead to grant of certificate/qualification recognized by law.
• Therefore, the service rendered by the applicant is not a service by way of ‘education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force’.

Observations of AAR w.r.t supply of food and accommodation to the students of the applicant

• The services of provision of food and accommodation to the students perusing the said courses are liable to GST under the same Notification No. 12/2017-Central Tax dated 28.06.2017  and also as clarified vide CBIC Circular No.85/04/2019-GST, dt.01.01.2019 that supply of food, beverages by an educational institution to its students, faculty and staff, where such supply is made by the educational institution itself, is exempt under Notification No. 12/2017-Central Tax dated 28.06.2017, vide Sl. No. 66 w.e.f. 01.01.2017 itself.
• As applicant is not qualified as an educational institute, the above exemptions won’t be applicable.

The applicant is not eligible for the exemption under Notification No. 12/2017-Central Tax dated 28.06.2017 as amended for supply of service of education as per the curriculum prescribed by the statutory authorities/ government to the students of the applicant for obtaining qualifications/certificates of CA-Foundation, CA-lnter, CA-Final, CMA (ICWA)- Foundation, CMA-lnter, CMA-Final and Intermediate and the charges collected by the applicant for catering services by supplying food to the students undergoing the above courses are chargeable under GST

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