2023 (11) TMI 138 - HC - GST

Exemption from GST - educational institution - fee collected by the petitioner from its enrolled students to extend the benefit of coaching for entrance examination and other educational services would not be exempted service - HELD THAT - All services supplied by an 'educational institution to its students are exempt from GST. Consideration charged by the educational institutes by way of entrance fee for conduct of entrance examination is also exempt. The exemption is wide enough to cover the amount or fee charged for admission or entrance, or amount charged for application fee for entrance, or the fee charged from prospective students for issuance of eligibility certificate to them in the process of their entrance/ admission to the educational institution. Services supplied by an educational institution by way of issuance of migration certificate to the leaving or ex-students are also covered by the exemption - such activities of educational institution are also exempt. Accordingly, it is clarified that the amount or fee charged from prospective students for entrance or admission, or for issuance of eligibility certificate to them in the process of their entrance/admission as well as the fee charged for issuance of migration certificates by educational institutions to the leaving or ex-students is covered by exemption under Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017. The proceedings are remanded to the third respondent for reconsideration reserving liberty to the petitioner to file a detailed response - Appeal allowed in part.

Summary

Issues Involved:
The judgment involves the interpretation of the expressions "educational institution" and "exempted service" under the Karnataka Goods and Service Tax Act/Central Goods and Service Tax Act, 2017, in relation to the fee collected by an institution providing higher secondary education for coaching services and other educational activities.

Issue 1: Interpretation of "Educational Institution" and "Exempted Service"

The petitioner challenged the order of the third respondent under the KGST/CGST Act, 2017, regarding the exemption of coaching fees collected from students. The third respondent differentiated between various fees charged, concluding that coaching fees are not exempted under the relevant notification. The interpretation was based on the Circular dated 03.08.2022 and the definition of "educational institution" as per the notification issued on 29.06.2017 and 25.01.2018.

Issue 2: Examination of Circular and Notification

The third respondent referred to specific paragraphs of the Circular dated 03.08.2022 to justify the decision regarding the exemption of certain fees charged by educational institutions. The petitioner argued that the third respondent did not consider the entire scope of the Circular, leading to an error in the interpretation of the exemption provisions. The Court highlighted the need for a comprehensive review based on the relevant parts of the Circular.

Issue 3: Reconsideration and Liberty to Petitioner

The Court directed a reconsideration of the matter by the third respondent, emphasizing the importance of evaluating whether coaching services provided by the educational institution should be exempted under the notification. The petitioner was granted the liberty to present all grounds supporting their case during the reconsideration process, ensuring a fair opportunity to address the issues raised.

Separate Judgement by High Court of Gujarat

The Court also discussed a similar case from the High Court of Gujarat regarding the exemption of an abacus course provided by the institution. The petitioner cited the Gujarat High Court decision, advocating for a liberal interpretation of exemption provisions in tax statutes. The Court instructed the third respondent to include a review of this aspect in the reconsideration process, aligning with the principles outlined in the Gujarat High Court decision.

In conclusion, the judgment allowed the petition in part, quashing the impugned order and remanding the proceedings for reconsideration by the third respondent. The petitioner was granted the liberty to file a detailed response, and the third respondent was directed to make a fresh decision considering all relevant aspects, including the points raised during the legal proceedings.