APPELLATE ADVANCE RULING ON TAXABILITY OF SPECIALIZED TRAINING

[Dr. Sanjiv Agarwal]

UCMAS is a child development program based on Visual Arithmetic and Abacus that boosts brainpower in children aged 4-13 years. Along with strengthening math skills, the UCMAS approach promotes whole brain development and establishes foundational building blocks like memory, concentration, creativity and problem solving - core skills that inspire greater confidence and success in all subject areas and in life. The program equips them with the skills they need to improve overall academic achievement and to confidently meet life’s challenges and achieve greatness. It has been submitted that UCMAS is much more than developing number skills. Using Math as a medium and Abacus as a tool, this program helps developing basic cognitive skills and cognitive executive functions of a child.

The service provider sought advance ruling on as to whether the activities provided by UCMAS using ‘abacus’ quarterly for exemption from payment of GST ?

The AAR ruled that applicant was not entitled to the exemption provided vide S.No. 80 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 issued under the CGST Act, 2017 and corresponding Notification issued under the GGST Act, 2017 and Sl. No. 83 of Notification No. 9/2017-Integrated Tax (Rate) issued under the IGST Act, 2017. Hence the activity provided by UCMAS using abacus does not qualifies for exemption from the payment of Goods and Services Tax. [In Re: Omnisoft Technologies Pvt. Ltd. 2018 (10) TMI 301 - AUTHORITY FOR ADVANCE RULING, GUJARAT].

Being aggrieved, the appeal had been preferred before AAAR.

In Re: Omnisoft Technologies Pvt. Ltd. 2019 (3) TMI 1012 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT;  it was submitted that with products like UC-MAS, UC-Dino Art, and UC-MLS from UCMAS Education Group Malaysia, with the medium of using tools like ABACUS, arts, various memory enhancing techniques (like mental mapping, mnemonics, etc.), a child’s mental abilities  and faculties like concentration power, memory, alertness, imagination skills (visualization power) and focus can be enhanced.

The AAAR observed that the moot point is whether the activities of the appellant can be considered as recreational activities relating to art or culture. The AAR has relied upon the dictionary meaning of ‘Art’, whereby ‘Art’ is the expression or application of human creative skill and imagination, typically in a visual form such as painting or sculpture, producing works to be appreciated primarily for their beauty or emotional power. It was held that the activities of the appellant do not fall within the term ‘Art’. These findings of the AAR have not been challenged. On merit, the activity of the appellant cannot be construed as training or coaching in recreational activities relating to art.

It further observed that it is settled principle of law that exemption notification has to be read strictly so far as the eligibility is concerned. When the wordings of the Notification are clear and unambiguous, they must be given effect to. By a strained reasoning, benefit cannot be given when it is clearly not available. The appellant has failed to establish that activities carried out by them are covered under Entry No. 80 of Notification No. 12/2017-Central Tax (Rate).

The AAAR therefore, affirmed the advance ruling and rejected the appeal.