2020 (12) TMI 793 - AAR - GST

Taxability - sale of application, registration of course, inspection, etc with the Principal Supply' of affiliation provided by the Bharathiar University to its constituent colleges (viz) Self-financing and management colleges - composite supply of services or not - Whether the services provided by the University to its constituent colleges are exempted vide sl.no 66 of Notification no.12/2017 CT(Rate) dated 28.06.2017? - HELD THAT - The sale of application, registration, inspection are all supplies which are naturally bundled and supplied in conjunction in the course of the activity of extending affiliation. Thus, all the fees in question collected by them and the supplies thereto results in the activity of affiliation of the institution, upgradation, increase in the capacity/course, etc and are governed by the UGC regulation. The amendment by Notification No. 2/2018-C.T.(Rate) dated 25.01.2018 was proposed to exempt services relating to admission to, or conduct of examination for admission to all educational institutions,. as defined in the notification(definition 2(y) of Notification No. 12/2017-CT(R)). Thus the entry at 66(b)(iv) seeks to exempt only those services provided to such institution in relation to admission of students or conduct of examination for such admission to all the educational Institutions, including the higher educational institutions, which were not exempted up to this amendment - As per the definition of affiliation under regulation 2.1 above, affiliation in relation to a college is an activity to recognize such college to the privileges of the university to which the institution is affiliated. In other words, the activity of affiliation is to monitor whether the institution possess the required infrastructure in terms of Space, Technical prowess, financial liquidity, faculty strength, etc and thereby eligible for the privileges to conduct the course/programme of study for the degree/title extended by the University to the students enrolled in such institutions. In the case at hand, it is evident that the affiliation services provided by the applicant enables the said institution to conduct the course/programme and do not relate to admission of students to such course/programme in the said institutions or conduct of examination for such admission in the said institution. Also, the exempted services on the conduct of examination is that related to the admission to such institution and not related to the examination based on which degree/title, etc are conferred to the students, as is being claimed by the applicant, though we do not part any opinion on the claim of the applicant that they extend such services to the institutions by extending the affiliation - thus, the composite supply of sale of application, registration, inspection, etc with 'affiliation' of the said institution/course as the 'Principal supply' are not exempted under the entry SI.No.66 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.

Summary

Issues Involved:
1. Whether the services provided by the University to its constituent colleges relating to admission to, or conduct of examination by such institution by way of various fees are exempted under Sl.No. 66 of Notification No. 12/2017 CT(Rate) dated 28.06.2017.

Detailed Analysis:

1. Nature of Services and Fees:
The applicant, a University, collects various fees from affiliated colleges, including application form fees, application fees, inspection fees, affiliation fees, initial and permanent affiliation fees, continuation of affiliation fees, fees for increasing intake, and penal fees for late applications. The applicant argues that these services are related to the admission of students and the conduct of examinations, thus should be exempt under Sl.No. 66 of Notification No. 12/2017-CT(Rate).

2. Composite Supply:
The applicant contends that "affiliation" is the principal supply, and other activities like application, registration, inspection, etc., are naturally bundled with it. Section 2(30) of the GST Act defines "composite supply" as a supply consisting of two or more taxable supplies naturally bundled and supplied in conjunction with each other, one of which is a principal supply. The authority agrees that the entire gamut of activities for which the fees are collected is a composite supply with "affiliation" being the principal supply.

3. Exemption Analysis:
The exemption under Sl.No. 66 of Notification No. 12/2017-CT(Rate) as amended by Notification No. 02/2018-C.T.(Rate) dated 25.01.2018, exempts services provided to an educational institution by way of services relating to admission to, or conduct of examination by, such institution. The applicant claims that their services fall under this exemption since affiliation is essential for admission and examination.

4. Fitment Committee and GST Council's Intent:
The Fitment Committee's recommendation, accepted by the GST Council, aimed to exempt services relating to admission to or conduct of examination for admission to all educational institutions. The amendment was to extend the exemption to higher educational institutions, which were not exempted earlier. The authority interprets this to mean that the exemption applies to services directly related to admission or conduct of entrance examinations, not to affiliation services.

5. Affiliation Services:
Affiliation involves recognizing a college to be eligible for the privileges of a university, ensuring the institution meets required standards. The authority concludes that affiliation services do not directly relate to the admission of students or the conduct of examinations for admission. Hence, these services are not covered under the exemption provided in Sl.No. 66 of Notification No. 12/2017-CT(Rate).

Ruling:
The composite supply of sale of application, registration of course, inspection, etc., with the principal supply of "affiliation" provided by the University to its constituent colleges is not exempted under Sl.No. 66 of Notification No. 12/2017-CT(Rate) dated 28th June 2017 as amended by Notification No. 02/2018-C.T.(Rate) dated 25.01.2018.