GST ON SUPPLY OF FOOD AND ACCOMMODATION SERVICES FOR COACHING SERVICES

[Dr. Sanjiv Agarwal]

In one of the recent Advance Rulings, the Authority for Advance Rulings, Andhra Pradesh, has opined that GST will be levied on supply of food and accommodation services for coaching services and no exemption is available to such services. [In Re: Master Minds 2020 (7) TMI 348 - AUTHORITY FOR ADVANCE RULINGS, ANDHRA PRADESH ].

In the instant case, the applicant was a proprietary firm and a leading educational institution providing coaching to students for Chartered Accountancy certificate (CA); Cost and Works Accountancy Certificate (ICWA) and Intermediate Certificate. The coaching provided by the applicant enables the students to appear for the examinations conducted by the respective statutory bodies i.e., Intermediate (Higher Secondary Education), Chartered Accountancy Course (consisting of three levels i.e. CA Foundation Course (earlier referred as ‘CPT), CA-Intermediate (earlier referred as TPCC’) Course and CA-Final Course), and Cost Management Accountancy (Consisting of three levels i.e. CMA Foundation Course, CMA-Intermediate Course and CMA-Final Course) and to obtain the necessary qualifications. The applicant’s registration with Service tax department was migrated to GST under GST Act w.e.f. 01.07.2017. However, on the request of the applicant on the ground that the educational services provided by the applicant were exempted under GST vide entry No 66 of Notification No.12/2017-Central Tax dated 28.06.2017, the department approved cancellation of Migrated Registration.

The applicant was initially registered with the service tax Department as a service provider under the category’ of ‘Commercial Training or Coaching Centre and was paying service tax. However, when exemption was provided to the services of a Commercial Training or Coaching center by way coaching that leads to any certificate recognized by law under Notification No.33/2011-ST dt.25.4.2011, he stopped payment of service tax on due intimation to the service tax department.

The service tax department issued show cause Notices demanding service tax on the fee collected by the applicant and certain demands were dropped and some confirmed with the reasons detailed below, as can be seen from the copies of the show cause Notices and orders submitted by the applicant along with his application:

1. The demands in respect of the coaching provided for obtaining certificates of CA-Final, CA-Inter (IPCC) and ICWA Final are Not sustainable since the coaching provided for these courses lead to grant of any certificates issued by statutory bodies duly recognized under Law enacted by the Parliament.
2. The demands in respect of the coaching provided for CPT (Now called CA-Foundation) and ICWA-Foundation (presently called ICWA-Foundation) are sustainable since the coaching provided for these courses does Not lead to grant of any certificates recognized by Law.
3. The demands in respect of coaching provided for the Intermediate course is Not correct since the intermediate certificate issued by the Board of Intermediate Education is a certificate recognized under law but since the demand is sustainable as the applicant had Not provided the details of all the students to whom the coaching is provided and since the applicant is collected more fee than that prescribed by the Board of Intermediate Education.

The above orders were accepted by the committee of Chief Commissioners of the department and the service tax department had Not filed any appeal against the said orders. However, the applicant filed appeals before the Tribunal against the confirmation of demands on certain courses and the same are pending before it. The applicant was even granted refund of the service tax paid on such services by the jurisdictional Assistant Commissioner and the department had not filed any appeal against such refund order.

The latest show cause Notice was issued to the applicant for the period from 01.04.2012 to 30.06.2017 demanding service tax on the coaching provided by the applicant for the courses of CA and ICWA but the demand was dropped by the Commissioner of Central Tax, Guntur both on merits and limitation.

The applicant sought advance ruling from the Authority for Advance Ruling on the following questions:

1. Whether the services of ‘supply of service of education’ as per the curriculum prescribed by the statutory authorities/ government to the students of the applicant for obtaining qualifications/ certificates of CA-Foundation, CA-Inter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate duly recognized by the respective statutory authorities/ government are exempted under Notification No.12/2017-CT (Rate) dt.28.06.2017 (entry No.66(a)), as amended?
2. Whether the charges collected for providing accommodation to the students undergoing the above courses are exempted from GST as provided under Notification NO.12/2017-CT (Rate) dt.28.06.2017 (entry No.14), as amended read with Circular NO.32/06/2018-GST dt. 12.2.2018 since the amount charged from the students by the hostel run by the applicant is less than ₹ 1000/- per day?
3. Whether the charges collected by the applicant for catering service by supplying food to the students undergoing the above courses are exempted from GST as provided under Notification NO.12/2017-CT (Rate) dt.28.06.2017 (entry No.66(a)), as amended?

Whether the services of supply of service of education as per the curriculum prescribed by the statutory authorities/ government to the students of the applicant tor obtaining qualifications/ certificates of CA-Foundation, CA-Inter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate duly recognized by the respective statutory authorities/ government are exempted under Notification No.12/2017-CT (Rate) dated 28.06.2017 (entry No.66(a)), as amended or not?

In the instant case, the coaching or training service provided in respect of the courses pertaining to CA (Inter & Final) and ICWA (Inter & Final) does Not fall under clause (i) of the above said definition, as the same is Not related to pre-school education and education up to higher secondary school or equivalent. Similarly, the service provided by the applicant also does Not fall under clause (iii), as the same is Not related to imparting of education as a part of an approved vocational education course (which is generally a Non-academic course and a specific trade / vocation oriented course) - In the instant case, the coaching or training provided by the applicant is for preparing the students for appearing CA(Inter & Final) and ICWA (Inter & Final) Exams conducted by ICAI/ ICWAI. The said coaching or training per se does Not lead to grant of a certificate or diploma or degree or qualification which is recognized by any law. It only aims at giving a better preparation to the students and improves their chances in the examination. It is similar to any other coaching or training given in respect of competitive / entrance examinations such as IIT, EAMCET etc.

It is pertinent to mention that the coaching or training as imparted by the applicant is neither mandatory Nor sine qua Non to the students appearing for CA / ICWA examination. Students, who prepare on their own, can also appear for these examinations and qualify basing on their performance. Hence, as stated supra, the coaching or training imparted by the applicant is only a facilitation / improvisation of the preparation for the said exams and canNot be considered as a coaching/training leading to grant of certificate, qualification etc. recognized by law - the coaching or training service provided by the applicant to the aspirants of CA-Foundation, CA-lnter, CA-Final, CMA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate is Not the service provided by means of ‘education as a part of curriculum that has been prescribed for obtaining a qualification prescribed by law’. Hence it cannot be said that the coaching / training given by the applicant to CA aspiring students (for appearing and qualifying in the examinations) would lead to grant of certificate/qualification recognized by law. Therefore, the service rendered by the applicant is Not a service by way of ‘education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force’.

The Authority for Advance Ruling,  held that the services of provision of food and accommodation to the students perusing the said courses are liable to GST under the same Notification and also as clarified vide CBIC Circular No .85/04/2019-GST dated 01.01.2019 that supply of food, beverages by an educational institution to its students, faculty and staff, where such supply is made by the educational institution itself, is exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, vide SI. No. 66 w.e.f. 01.01.2017 itself. As applicant not qualified as an educational institute, the above exemptions won’t be applicable.

The AAR thus ruled as under:

1. The applicant is not eligible for the exemption under Entry No.66(a) of Notification No.12/2017-CT(Rate) dated 28.06.2017, as amended.
2. The applicant is not eligible for the exemption under Entry No.14 of Notification No.12/2017-CT(Rate) dated 28.06.2017.
3. The applicant is not eligible for the exemption under Entry No. 66(a) of Notification No.12/2017-CT(Rate) dated 28.06.2017.