2018 (11) TMI 883 - AAR - GST

Levy of GST - education and training programmes conducted through its 13 co-operative training centres and 33 district co-operative boards by charging fees to participants - non-profit making body - services provided by them are not in respect of their own students, faculty and staff - Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017. Held that - Section 24A is applicable to members of societies so that they can effectively understand participate in the management of the society. The said section also says that every society shall contribute annually towards the education and training fund of such State federal societies State Apex Training Institutes, notified under subsection (1), at such rates as may be prescribed, and different rates may be prescribed for different societies or classes of societies. Hence it is clearly seen that there is no funding from the Government directly or indirectly to the applicant as claimed by them in their submission and also that there may be other such State Federal Societies and State Apex Training Institutes which have been notified for providing such education/coaching/ training. Applicant are neither providing any services to the Central Government, State Government, Union territory administration under any training programme nor is the expenditure borne by the Central Government, State Government, Union territory administration. In their case they are funded by the fees received from the societies for the training of their members - they cannot be considered as an educational institution providing services to its students, faculty and staff and therefore the supply of services by them to the members of the cooperative societies do not get exemption given under Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-11 (Rate) both dated 28-6-2017. There appears to be no funding by the Government whether direct or indirect. The Societies Act referred above, vide Section 24A has laid down that every society shall organise co-operative education and training, for its members, officers and employees from the applicant or other notified institutes and every society shall contribute annually towards the education and training fund of the State federal societies or State Apex Training Institutes. Hence it is very clear that there is no funding by the Government in this case. Services provided by them are not in respect of their own students, faculty and staff - Held that - Services supplied /provided by an educational institution to its students, faculty and staff is exempt from GST - Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017. They are in fact supplying services to other cooperative societies and their members and not to their own faculty, etc. Hence there is no way that their remuneration recovered from the societies can be treated as non-taxable. The applicant is supplying services to their Member Societies, against a consideration received from them in the form of Annual fees and their supply is in furtherance of business as defined under Section 2 (17) (e) of the Act - the applicant is a person (as defined under Section 2(84) of the GST Act, Who is supplying services (as defined under Section 7(1) of the GST Act) in the nature of educational, coaching and training to its members only (and not non members), for a consideration (as defined under Section 2(31)). The applicant is not funded in any way by the Government. Ruling - The applicant s activity is covered within the scope of supply of services and there is no exemption in respect of their supply as per detailed discussions above and therefore the same is liable to GST at applicable rates.

Summary

Issues Involved:
1. Whether the Maharashtra Rajya Sahakari Sangh Ltd. (MRSSL) is exempt from GST on the education and training services it provides.
2. Whether the fees received by MRSSL from cooperative societies constitute indirect funding by the Government.
3. Whether MRSSL qualifies as an educational institution under the GST exemption provisions.

Issue-wise Detailed Analysis:

1. Exemption from GST on Education and Training Services:
The applicant, MRSSL, a state-level apex training institute, provides education and training to members of cooperative societies in Maharashtra. MRSSL argued that it should be exempt from GST as it is a non-profit organization conducting these activities as a statutory requirement under the Maharashtra Cooperative Societies Act, 1960. However, the Authority for Advance Ruling (AAR) noted that MRSSL charges fees for these services and does not receive direct or indirect funding from the government. Therefore, MRSSL's activities are considered a supply of services under Section 7 of the CGST Act, 2017, and are liable to GST at applicable rates.

2. Fees as Indirect Government Funding:
MRSSL claimed that the fees received from cooperative societies should be treated as indirect government funding, as these contributions are mandated by Section 68 of the Maharashtra Cooperative Societies Act, 1960. The AAR rejected this argument, stating that there is no direct or indirect government funding involved. The fees paid by cooperative societies for training services do not constitute government funding, and thus, MRSSL does not qualify for any GST exemption based on this claim.

3. Qualification as an Educational Institution:
MRSSL contended that it should be treated as an educational institution and be exempt from GST under Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate). The AAR examined whether MRSSL provides services to its own students, faculty, and staff, which would qualify it for exemption. However, the AAR found that MRSSL provides training to members of other cooperative societies and not to its own students, faculty, or staff. Therefore, MRSSL does not meet the criteria for exemption as an educational institution under the mentioned notifications.

Conclusion:
The AAR concluded that MRSSL's activities constitute a supply of services under the GST Act and are liable to GST at applicable rates. The fees received from cooperative societies do not amount to indirect government funding, and MRSSL does not qualify as an educational institution for GST exemption purposes. Thus, MRSSL's request for GST exemption was denied.