2025 (3) TMI 765 - AAR - GST

Exemption from service tax - services provided by the applicant to the school students by way of transportation of students and staff shall be considered as the services provided to the school (Educational Institute) - applicability of Serial No.66 of N/N. 12/2017-Central Tax (Rate) dated 28th June 2017. Whether the services provided by the applicant to the school students by way of transportation of students and staff should be considered as services provided to the school (Educational Institute)? - HELD THAT - Though the lease agreement in the instant case is executed with the school administration we observe that the same has been carried out only to comply with the statutory requirements. On perusal of the Profit and Loss Account furnished for the year 2023-24 it is seen that only one entry viz. Bus Fees Receipt is mentioned on the Income side under the head Direct Incomes which relates to Student Transport Fees received from the students. And no entry is seen to have been made either on the Income side or on the Expenditure side of the Profit and Loss Account as far as it relates to school which goes to show that the applicant is neither receiving any amount from the school nor paying any amount to the school. Under these circumstances as the consideration towards the transportation activity are received in full by the applicant from the students concerned and as no consideration is received by school administration it becomes clear that no services are rendered by the school to the students in relation to transportation of students. Once it is clear that in effect the school has outsourced the transport service to the applicant and that the applicant is in direct receipt of the consideration from the students the service rendered by the applicant to the students is to be considered as Transport of passenger by any motor vehicle which merits classification under service SAC 9964 attracting GST at 5% without ITC as per Sl.No.8(vi) of Notification No. 11/2017 dated 28.06.2017 as amended vide Notification No.31/2017-Central Tax (Rate) dated 13.10.2017. Whether the services provided by the applicant are exempted from GST as per Serial No.66 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 or any other applicable provision of the Act? - HELD THAT - The entry as per Serial No.66 of N/N.12/2017 Central Tax (Rate) dated 28th June 2017 states clearly that services provided by way of transportation of students faculty and staff are exempted if the said services are provided to an educational institution. It is quite clear that the applicant receives the transportation cost directly from the students and that no consideration is being paid by the school towards the transportation charges of either the students or its faculty and staff. Further having held already that no service is provided to the school by the applicant it is opined that the exemption as provided under Sl. No.66 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 as amended is not available to the applicant under the facts and circumstances of the instant case. Apart from the same on further examination of the other legal provisions the activities carried out by the applicant in the instant case do not get exempted under any other provisions of the Act as well. Conclusion - i) The service provided by the applicant to the school students by way of transportation of students and staff cannot be considered as the services provided to the school (Educational Institute). ii) The service provided by the applicant as mentioned above is not exempted from GST either under Serial No.66 of Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017 or under any other provisions of the Act.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

(i) Whether the services provided by the applicant to the school students by way of transportation of students and staff should be considered as services provided to the school (Educational Institute).

(ii) Whether the services provided by the applicant are exempted from GST as per Serial No.66 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 or any other applicable provision of the Act.

ISSUE-WISE DETAILED ANALYSIS

Issue (i): Services Provided to the School (Educational Institute)

Relevant legal framework and precedents: The legal framework involves the interpretation of whether services provided by the applicant to school students by way of transportation can be classified as services provided to an educational institution. The relevant statutes include the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act, particularly the provisions relating to service classification and exemptions.

Court's interpretation and reasoning: The Court examined the lease agreement between the applicant and the school, which was primarily executed to comply with statutory requirements. The agreement did not specify any consideration paid by the school to the applicant for transportation services, nor did it detail how transportation fees were to be collected.

Key evidence and findings: The applicant collected transportation fees directly from students, as evidenced by receipts indicating GST collection at a rate of 5%. The profit and loss account showed income solely from student transport fees, with no financial transactions involving the school.

Application of law to facts: The Court determined that since the applicant received all consideration directly from students and not from the school, the services were not rendered to the school. The role of the school was limited to compliance with statutory regulations, and it did not provide or receive any transportation services.

Treatment of competing arguments: The applicant argued that the service was provided to the school as per the lease agreement. However, the Court found that the agreement was a formality, and the actual service recipient was the student, not the school.

Conclusions: The Court concluded that the services provided by the applicant to the school students by way of transportation could not be considered as services provided to the school. The first question was answered in the negative.

Issue (ii): Exemption from GST

Relevant legal framework and precedents: The legal framework involves the interpretation of Serial No.66 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, which exempts certain services provided to educational institutions from GST.

Court's interpretation and reasoning: The Court analyzed whether the transportation services provided by the applicant qualified for exemption under the said notification. The exemption applies only if services are provided to an educational institution.

Key evidence and findings: The applicant charged and collected GST from students directly, and no consideration was paid by the school for transportation services. The Court noted that the service was classified under SAC 9964, attracting GST at 5% without ITC.

Application of law to facts: Since the applicant received payment directly from students and not from the educational institution, the service did not qualify for exemption under the notification. The Court also examined other legal provisions and found no applicable exemptions.

Treatment of competing arguments: The applicant contended that the service was exempt due to its nature of transportation for educational purposes. However, the Court emphasized the necessity of a direct service relationship with the educational institution for exemption eligibility.

Conclusions: The Court concluded that the services provided by the applicant were not exempt from GST under Serial No.66 of Notification No. 12/2017-Central Tax (Rate) or any other provisions. The second question was answered in the negative.

SIGNIFICANT HOLDINGS

The Court established the following core principles:

(i) Services provided directly to students, with no financial involvement or service relationship with the educational institution, do not qualify as services provided to an educational institution.

(ii) For GST exemption under Serial No.66 of Notification No. 12/2017, there must be a direct service relationship with the educational institution.

Final determinations on each issue:

(i) The service provided by the applicant to the school students by way of transportation of students and staff cannot be considered as services provided to the school (Educational Institute).

(ii) The service provided by the applicant is not exempted from GST, either under Serial No.66 of Notification No. 12/2017 Central Tax (Rate) or any other provisions of the Act.