EXEMPTION TO EDUCATION SERVICES PROVIDED BY IIM

[Dr. Sanjiv Agarwal]

From 31st January, 2018 to 31st December, 2018, IIMs can avail exemption under S. No. 66 or Sl. No. 67 of Notification. No 12/2017-CT (Rate) dated 28.06.2017. The Indian Institute of Management, Calcutta, is an ‘education institution’ in terms of meaning of clause 2(y) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 after the enactment of IIM Act on and from 31.01.2018.

In Re: Indian Institute of Management, Calcutta  2019 (3) TMI 1015 - APPELLATE AUTHORITY FOR ADVANCE RULING, WEST BENGAL;  IIM, Calcutta is a an Educational Institution funded by the Government of India, engaged, inter alia, in the provision of Education services to the students and others.

The Indian Institute of Management Act, 2017, which came into force on and from 31.01.2018, granted IIMs the status of “institutions of national importance” and they were empowered to grant degrees, diplomas and other academic distinctions or tiles. It is an “Educational Institution” within the meaning of sub-clause (ii) of clause 2(y) of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017, with effect from 31.01.2018.

It sought the advance ruling on the following questions:

1. After the introduction of the IIM Act with effect from 31.01.2018, whether or not the IIM, Calcutta should be considered an “Educational Institution”
2. whether the IIM, Calcutta is eligible for Exemption under Entry No. 66(a) of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 (hereinafter referred as “the Exemption Notification”), and from which date it should be effective
3. whether or not the IIM, Calcutta is eligible to get refund of the tax amount already paid by them.

The AAR vide Order dated 02.11.2018 [2018 (11) TMI 336 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL], ruled as follows:

1. The Applicant is an ‘educational institution’ within the meaning of sub-clause (ii) of clause 2(y) of Notification No. 12/2017-Central Tax (rate) dated 28/06/2017.
2. The Applicant is eligible for benefit for exemption under Entry No. 66(a) of Notification No. 12/2017-CT (Rate) dated 28.06.2017, being an educational institution in terms of clause 2(y) of the said notification.”

In the instant case, Revenue Department has filed appeal before the AAAR on the following grounds:

1. The exemption under Sl. No. 66(a) of the Notification No. 12/2017-Central Tax (rate) dated 28.06.2017 has been granted for services provided by an educational institution to its students, faculty and staff. The educational institute refers to any institution in general associated with training and learning in the field of education.
2. The AAR failed to consider the fact that S. No 67 of Notification No. 12/20170 Central Tax (rate) dated 28.06.2017 being specific in nature and applicable for IIMs only should prevail over the general exemption as provided in S. No. 66(a). The description, as contained in the exemption notification, clearly indicates that the notification intends to keep IIMs separate from the other educational Institutions within meaning of Sl. no. 66(a). Otherwise the restriction imposed under S. No. 67 shall become infructuous.
3. The AAR failed to discuss on the issue as to whether the government has empowered the IIMs through any set of Acts or Rules to confer ‘degrees’ which requires no approval of UGC as laid down in section 22(1)(c) of UGC Act 1956. In absence of the same it cannot be stated that the qualifications offered by IIMs are recognized by the law.

The AAAR observed that from 31st January, 2018 to 31st December, 2018, IIMs can avail exemption under S. No. 66 or Sl. No. 67 of Notification. No 12/2017-CT (Rate) dated 28.06.2017. It was thus held that the Indian Institute of Management, Calcutta, is an ‘education institution’ in terms of meaning of clause 2(y) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 after the enactment of IIM Act on and from 31.01.2018.

The AAAR held that the exemption from GST under S.No. 66 of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 was not available to the respondent from 1-7-2017 to 30-1-2018. However, during this period exemption was available for specific programmes under Serial No. 67. Further for the period 31-1-2018 to 31-12-2018, the respondent could avail exemption for the eligible programmes either under S.No. 66 or S.No. 67. After the deletion of S.No. 67 with effect from 1-1-2019, the exemption is available under Entry No. 66. The said entries should be read harmoniously with the Circular No. 82/01/2019-GST (F.No. 354/428/2018-TRU), dated 1-1-2019.

The advance ruling was to this extent modified.

Discussions to this article

[Ganeshan Kalyani]

When big bunch of notification, clarification is issued in CBIC, some tend to get skipped from the notice of the reader. May be at that point of time that notification, circular is less relevant. By going through the article with peace mind at ease gives knowledge of that the missed update and one can apply to the practice I.e. guide his client. It is a noble work of fetching the update from past, summarizing them and presenting before the readers. Thanks for the effort and sharing the same.

[Dr. Sanjiv Agarwal]

Thanks so much.