2018 (7) TMI 1495 - AAR - GST

Composite supply of services - nature of supply - rate of tax - Exam Support Services - place of supply - conducting of exams - applicant is a subsidiary of the British Council which is the U.K. s International Organisation for cultural relations and educational opportunities. International English Language Testing System - Applicant has agreed to provide Exam Support Services and Student Facilitation Services to BCUK. Whether alt the activities involved in the exam support services constitute a mixed supply or a composite supply? What will be rate of GST applicable on these exam support services? What is the place of supply of these exam support services rendered by the Applicant BCKU? Held that - A perusal of the pan-A, B & C of schedule-I appended to the copy of proposed agreement submitted on record, reveals the type of services as mentioned in part-B and part-C or the schedule-I are the services which are proposed to the provided by the applicant - Under part-C of schedule-I to the agreement it is specified that the Applicant will also provide student facilitation services. Since the above services are for conducting the IELTS exams and are so bundled with each other that these can not have an independent existence and therefore these are composite supply of services. Since the principle supply is of the service of conducting exams it is rightly classifiable under service code 999299 group 99929 and heading 9992 as education support service and therefore taxable @ of 18% (9% CGST and 9% HGST) vide sr. 30 of N/N. 11/2017 Central Tax (Rate) dated 28.06.2017 and corresponding State N/N. 46/ST-2 Dt. 30.06.2017. Ruling - The activity involved in the exam support service as proposed at schedule-I part-A and B of the proposed agreement constitute a composite supply. Since the principle supply is conducting of IELTS exam it is covered under Service Code 999299 Group 99929 and Heading 9992 as education support service and therefore taxable @ of 18% (9% CGST and 9% HGST) vide sr. no. 30 of notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 and corresponding State notification no. 46/ST-2 Dt. 30.06.2017.

Summary

Issues Involved:
1. Nature of supply - Mixed supply or composite supply?
2. Applicable rate of GST on exam support services.
3. Place of supply of exam support services.

Nature of Supply - Mixed Supply or Composite Supply:
The Applicant sought an advance ruling on whether the activities involved in the exam support services constitute a mixed supply or a composite supply. The Assistant Commissioner opined that the services proposed to be provided by the Applicant constitute a composite supply of conducting exams and other back-end support services. The Applicant argued that the services are bundled together, with the principal supply being the conduction of exams, classifiable as educational support services under the GST regime. The Authority for Advance Ruling concurred, determining that the activities involved in the exam support services are a composite supply. The services were classified under Service Code 999299 Group 99929 and Heading 9992, taxable at 18% GST.

Applicable Rate of GST on Exam Support Services:
The second issue raised was regarding the rate of GST applicable to the exam support services. As the principal supply was identified as the conduction of IELTS exams, it was classified under education support services, attracting an 18% GST rate (9% CGST and 9% HGST). This determination was made based on the specific provisions of the GST law and the nature of the services provided under the agreement between the Applicant and the British Council, UK.

Place of Supply of Exam Support Services:
Although the Applicant also inquired about the place of supply of the exam support services, this question was not admitted for an advance ruling. The Authority clarified that its rulings were specific to the State, and the determination of the place of supply fell outside its scope. Therefore, the ruling was limited to addressing the nature of supply and the applicable GST rate on the exam support services. The decision on the admissibility of the application and the subsequent findings were based on a detailed examination of the agreement and relevant legal provisions.

This comprehensive analysis of the judgment by the Authority for Advance Rulings in Haryana provides clarity on the classification of services, tax implications, and the limitations of the ruling authority in addressing certain aspects of the GST regime. The ruling emphasizes the importance of understanding the nature of supply and the relevant GST rates to ensure compliance with the tax laws governing such transactions.