CBIC CLARIFICATION ON TAXABILITY OF VARIOUS SERVICES

[Dr. Sanjiv Agarwal]

CBIC has clarified on following services and issues of taxability / classification / valuation / tax rate, based on recommendations of 54^th GST Council meeting held on 09.09.2024 vide Circular No. 234/28/2024-GST dated 11.10.2024.

These services are:

• Applicability of GST on the service of affiliation provided by universities to colleges.
• Applicability of GST on the service of affiliation provided by Central and State educational boards or Councils, or other similar bodies, to schools.
• Applicability of GST on the Directorate General of Civil Aviation (DGCA) approved flying training courses conducted by Flying Training Organizations approved by the DGCA.
• Regularizing payment of GST on transport of passengers by helicopter
• Whether incidental/ ancillary services such as loading/ unloading, packing, unpacking, transshipment, temporary warehousing etc., provided in relation to transportation of goods by road is to be treated as part of Goods Transport Agency service, being composite supply, or these services are to be treated as separate independent supplies.
• Regularizing payment of GST on import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration.
• Applicability of GST on Preferential Location Charges (PLC) collected along with consideration for sale/ transfer of residential / commercial properties.
• Regularizing payment of GST on certain support services provided by an electricity transmission or distribution utility.
• Regularizing payment of GST on services of film distributors or sub-distributors who act on a principal basis to acquire and distribute films.

CBIC clarification on affiliation services 

CBIC has clarified as follows:

• On applicability of GST on service of affiliation provided by University to Colleges

• The activity of affiliation is to monitor and ensure whether the institution possesses the required infrastructure in terms of space, technical prowess, financial liquidity, faculty strength, etc. and is thereby eligible for the privileges to conduct the course/program of study for the degree/title extended by the University to the students enrolled in such institutions.
• The affiliation services provided by the universities to colleges are not by way of services related to the admission of students to such colleges or the conduct of examinations by such colleges.
• It is clarified that the affiliation services provided by universities to their constituent colleges are not covered within the ambit of exemptions provided to educational institutions in the notification No. 12/2017-CT(R) dated 28.06.2017 and GST at the rate of 18% is applicable on the affiliation services provided by the universities.

• On Applicability of GST on the service of affiliation provided by Central and State educational boards or Councils, or other similar bodies, to schools

• The activity of affiliation carried out by educational boards or councils, or other similar bodies, is to monitor and ensure whether the schools possess the required infrastructure, finances, faculty strength etc. and are thereby eligible for the privileges to operate under the aegis of said boards or councils.
• The services of affiliation provided to schools by educational boards or councils, or other similar bodies, are not by way of services related to the admission of students to such schools or the conduct of examinations by such schools.
• The GST Council recommended exempting the supply of affiliation services provided by Central and State educational boards or Councils, or other similar bodies, by whatever name called to government schools i.e. schools established, owned or controlled by the Central Government, State Government, Union Territory, local authority, Governmental authority or Government entity. Which has been exempted w.e.f. 10.10.2024 vide notification No. 08/2024-Central Tax (Rate) dated 08.10.2024.
• The GST Council further recommended regularizing the GST liability on such services provided to all schools for the period from 01.07.2017 to 17.06.2021, i.e., the date of issuance of Circular No. 151/07/2021-GST wherein accreditation services of boards are clarified to be taxable at the rate of 18%.
• It is clarified that services of affiliation, provided to schools by Central or State educational boards or councils, or other similar bodies, by whatever name called, are taxable. Further, as recommended by the Council, the payment of GST on the services of affiliation provided by Central and State educational boards or Councils, or other similar bodies, to all schools is regularized on ‘as is where is’ basis for the period from 01.07.2017 to 17.06.2021.

Clarification on Flying Training Courses 

CBIC has clarified on applicability of GST on the Directorate General of Civil Aviation (DGCA) approved flying training courses conducted by Flying Training Organizations approved by the DGCA:

• Vide Sl. No. 66 of the notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, services provided by educational institutions to its students, faculty and staff are exempt from levy of GST.
• Educational institution has been defined to mean an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force.
• Aircraft Rules, 1937 inter-alia, provide for ‘approved training’, i.e. training the curriculum of which has been approved by the DGCA, and ‘approved training organization’.
• The Civil Aviation Requirements (CAR) issued under the said rules also provide for a completion certificate to be issued by an approved FTO to each student who completes its approved course of training.
• The DGCA not only approves FTOs but also flying training courses and mandates the requirement of course completion certificates to be issued to successful candidates in terms of the Aircraft Act, 1934 and the rules prescribed thereunder.
• The approved flying training courses conducted by FTOs approved by DGCA, wherein the DGCA mandates the requirement of a completion certificate, are covered under Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and are hence, exempt.

Regularization of Payment of Tax

• Regularizing payment of GST on transport of passengers by helicopter:

• Payment of GST on transportation of passengers, with or without accompanied baggage, by air, in a helicopter on seat share basis has been regularized on ‘as is where is’ basis for the period from 01.07.2017 to 09.10.2024.
• It is clarified that transport of passengers by helicopter on other than seat share basis i.e., for charter operations will continue to attract GST at the rate of 18%.

• Regularizing payment of GST on import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration:

• Exempt import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration has been exempt vide Notification No. 08/2024-Integarted Tax (Rate) Dated 08.10.2024 effective from 10.10.2024.
• The payment of GST on import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration is regularized for the period from 01.07.2017 to 09.10.2024 on ‘as is where is’ basis.

• Regularizing payment of GST on certain support services provided by an electricity transmission or distribution utility:

• Supply of services by way of providing metering equipment on rent, testing for meters/ transformers/capacitors etc., releasing electricity connection, shifting of meters/service lines, issuing duplicate bills etc., which are incidental or ancillary to the supply of transmission and distribution of electricity provided by transmission and distribution utilities to their consumers has been exempted vide notification No. 08/2024- Central Tax (Rate) dated 08.10.2024 effective from 10.10.2024.
• The payment of GST on services provided by an electricity transmission or distribution utility which are incidental or ancillary to the supply of transmission and distribution of electricity by such utility, such as above is regularized on ‘as is where is’ basis from 01.07.2017 to 09.10.2024.

• Regularizing payment of GST on services of film distributors or sub-distributors who act on a principal basis to acquire and distribute films:

• The payment of GST on transaction between distributors and exhibitors wherein the distributors grant the theatrical rights to the exhibition centers is regularized for the period from 01.07.2017 to 30.09.2021 on ‘as is where is’ basis.

Clarification on incidental / ancillary services of GTA services

CBIC has clarified on Whether incidental/ ancillary services such as loading/ unloading, packing, unpacking, transshipment, temporary warehousing etc., provided in relation to transportation of goods by road is to be treated as part of Goods Transport Agency service, being composite supply, or these services are to be treated as separate independent supplies:

• Ancillary or incidental services provided by GTA in the course of transportation of goods by road, such as loading/unloading, packing/unpacking, transshipment, temporary warehousing etc. will be treated as composite supply of transport of goods.
• The method of invoicing used by GTAs will not generally alter the nature of the composite supply of service.
• However, if such services are not provided in the course of transportation of goods and are invoiced separately, then these services will not be treated as composite supply of transport of goods.

Clarification on PLC Charges on Properties

CBIC has clarified on Applicability of GST on Preferential Location Charges (PLC) collected along with consideration for sale/ transfer of residential / commercial properties:

• Allowing choice of location of apartment is integral part of supply of construction services and therefore, location charge is nothing but part of consideration charged for supply of construction services before issuance of completion certificate.
• Being charged along with supply of construction services for the apartment, the same attract GST at same rate as of construction services before issuance of completion certificate.
•  It is clarified that location charges or Preferential Location Charges (PLC) paid along with the consideration for the construction services of residential /commercial/industrial complex forms part of composite supply where supply of construction services is the main service and PLC is naturally bundled with it and are eligible for same tax treatment as the main supply of construction service.