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2022 (4) TMI 49 - HC - GSTExemption from GST or not - AAAR denined the benefit of exemption - services provided by the petitioner to school/educational organization in relation to ASSET examination - educational institution relating to conduct of examination by such institution or not - Entry Serial No.66 of the 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 - HELD THAT - The term education has not been defined. The Supreme Court, in the case of SOLE TRUSTEE, LOKA SHIKSHANA TRUST VERSUS COMMISSIONER OF INCOME-TAX, MYSORE 1975 (8) TMI 1 - SUPREME COURT , has explained the term education as a process of training and developing knowledge, skill, mind and character of students by formal schooling. The word education cannot be given a natural meaning by restricting it to the actual imparting of education to the students but should be given a wider meaning which would take within its sweep all the matters relating to imparting and controlling education. Examination is an essential component of education as it is one of the major means to assess and evaluate the skills of a candidate and the knowledge, be it a school test, university examination, professional entrance examination or any other examination. When the appellate authority says that the schools are not conducting the ASSET, or rather, the schools are facilitating the writ-applicant to conduct the ASSET, for which the schools get some remuneration towards the administration cost, it is thereby trying to erroneously convey that instead of the writ-applicant providing services to the schools, the schools are providing services to the writ-applicant, for which the schools receive administration cost - Indisputably, the question papers are set by the writ-applicant and the answers given by the students are assessed by the writ-applicant and the result of the ASSET is also prepared by the writ-applicant. The basic nature of the ASSET service is an examination to be conducted by the Educational Institution (School) but outsourced to the Educational Initiatives (EI). The observations made by the AAR in para 21.1 of its order clinches the issue. It is now well-settled that even in tax statutes, an exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive for promoting education or otherwise has some beneficial reason behind it. The exemption notification should be given a literal meaning - the exemption notification must be construed having regard to the purpose and object it seeks to achieve. The notification in the case on hand should be read as a whole. There need not be any further debate on the question, whether the services provided by the writ-applicant to the schools, which are educational institutions, fall within the meaning of the aforesaid notifications. The services, definitely fall within the two notifications referred. Writ application allowed.
Issues Involved:
1. Whether the services provided by the petitioner to schools/educational organizations in relation to ASSET examination are exempt from GST under the relevant notifications. 2. Interpretation of Entry No.66(b)(iv) of the Notification No.12/2017-Central Tax (Rate) and equivalent SGST and IGST notifications. 3. Determination of whether ASSET is conducted by schools or the petitioner. 4. Consideration of the broader implications of GST exemption for educational services. Issue-wise Detailed Analysis: 1. Exemption from GST for Services Provided in Relation to ASSET Examination: The petitioner sought a declaration that the services provided to schools/educational organizations in relation to the ASSET examination are exempt from GST under Entry No.66(b)(iv) of Notification No.12/2017-Central Tax (Rate) and equivalent SGST and IGST notifications. The Gujarat Authority for Advance Ruling initially ruled in favor of the petitioner, stating that the services provided were indeed exempt from GST. However, this ruling was challenged by the Assistant Commissioner, Central GST, leading to an appeal. 2. Interpretation of Relevant Notifications: The appellate authority's primary task was to interpret Entry No.66(b)(iv) of Notification No.12/2017-Central Tax (Rate) and equivalent SGST and IGST notifications. The appellate authority held that the ASSET examination conducted by the petitioner does not fall within the scope of the exemption provided under these notifications. The authority reasoned that the services provided by the petitioner were not directly related to the conduct of examinations by schools but were instead conducted by the petitioner itself. 3. Determination of Whether ASSET is Conducted by Schools or the Petitioner: A key issue was whether the ASSET examination could be considered as being conducted by the schools or by the petitioner. The appellate authority concluded that the ASSET examination was conducted by the petitioner, not by the schools. The authority noted that the schools merely facilitated the examination and collected fees on behalf of the petitioner, but the actual conduct and evaluation of the examination were managed by the petitioner. This distinction was crucial in determining the applicability of the GST exemption. 4. Broader Implications of GST Exemption for Educational Services: The court emphasized the importance of interpreting the term "education" broadly, encompassing all activities related to imparting and controlling education, including examinations. The court referred to several Supreme Court judgments that highlighted the significance of examinations as an integral part of the education system. The court also noted that the exemption notification should be interpreted liberally to promote education and avoid imposing GST on services that are essential for educational institutions. Court's Analysis and Conclusion: The court found that the appellate authority had misdirected itself by focusing on whether the ASSET examination was conducted by the schools or the petitioner, rather than considering the broader question of whether the services provided by the petitioner were related to the conduct of examinations by educational institutions. The court concluded that the services provided by the petitioner to schools were indeed related to the conduct of examinations and thus fell within the scope of the GST exemption provided under the relevant notifications. Final Judgment: The court quashed the impugned order passed by the Gujarat Appellate Authority for Advance Ruling and affirmed the order of the Gujarat Authority for Advance Ruling, thereby ruling that the services provided by the petitioner in relation to the ASSET examination are exempt from GST. The writ-application was allowed, and the petitioner was granted the relief sought.
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