2021 (7) TMI 604 - AAR - GST

Levy of GST - supply of service or not - pure agent services - payment made to American Academy of Professional Coders (AAPC) as examination fee for students on behalf of some of the students of the applicant institute - tax liability, when the applicant is collecting the actual examination fee and remitting that amount to AAPC as such without taking any service charges either from students or from AAPC - payment made to AAPC as examination fee on behalf of outside students - applicability of decision of Karnataka Advance Ruling in IN RE M/S. ARIVU EDUCATIONAL CONSULTANTS PVT. LTD. 2019 (10) TMI 757 - AUTHORITY FOR ADVANCE RULING, KARNATAKA that such payment of examination fee is not a service chargeable to tax under GST laws. Whether the amount of examination fee collected and paid by the applicant to AAPC satisfy the requirement of Rule 33 of the CGST Rules, 2017 so as to be excluded from the value of taxable supply provided by the applicant? HELD THAT -In the first situation, the applicant is providing training services in relation to medical coding program to the students enrolled with them to appear in the examination conducted by the AAPC. The applicant is collecting fees for such training provided by them and is discharging GST at the rate of 18% on the fees collected. They are collecting the amount required to be paid as exam fees from the students in addition to their training fees and making payment of the exam fee amount through the online facility to AAPC. The applicant is not collecting any service charge for providing the facility for payment of exam fee either from the students or from AAPC - In the second situation the applicant is providing the same online facilities for payment of fees to students who are appearing for the examination conducted by the AAPC but are not enrolled with them for training. The facility of payment of fees through online platform is extended to interested students who approach them. The examination fees is paid by the applicant to AAPC for the examination and certification services provided by the AAPC to the students in addition to the training and fee payment facilitation service provided to the students by the applicant. Therefore, all the conditions mentioned in the said Rule 33 for exclusion of the amount collected as examination fee from taxable value of services provided by the applicant is satisfied - In order to come within the scope and meaning of supply as defined in Section 7 of the CGST Act the activity / transaction shall be for a consideration in the course or furtherance of business. Though the fee payment facilitation services are provided by the applicant in the course or furtherance of their business as the same is being made without consideration it falls outside the meaning and scope of supply as defined in Section 7 of the CGST Act, 2017. Therefore, the applicant is not liable to pay GST on the fee payment facilitation services provided to outside students without consideration. Scope of Advance Ruling - Applicability of ruling of the Karnataka Authority for Advance Ruling in M/s. Arivu Educational Consultants Private Ltd. - HELD THAT - The question not being in respect of any of the matters on which advance ruling can be sought, this authority is not having jurisdiction to give ruling on the question.

Summary

Issues Involved:
1. GST liability on collection and payment of examination fees to AAPC for students enrolled in the applicant's training program.
2. GST liability on collection and payment of examination fees to AAPC for outside students not enrolled in the applicant's training program.
3. Applicability of Karnataka Advance Ruling in M/s. Arivu Educational Consultants Pvt. Ltd. to the applicant's case.

Issue-wise Detailed Analysis:

1. GST Liability on Collection and Payment of Examination Fees to AAPC for Students Enrolled in the Applicant's Training Program:

The applicant, engaged in providing training for students in medical coding, also facilitates the payment of examination fees to AAPC for its students without charging any additional fee. The applicant sought clarity on whether this activity attracts GST liability.

The ruling examined Rule 33 of the CGST Rules, 2017, which stipulates that costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply if certain conditions are met:
- The supplier acts as a pure agent on behalf of the recipient when making the payment.
- The payment made by the pure agent is separately indicated in the invoice.
- The supplies procured by the pure agent are in addition to the services supplied on their own account.

In this scenario, the applicant collects examination fees from students enrolled in their training program and remits the same to AAPC. The applicant meets all conditions under Rule 33, as they act on behalf of the students, the payment is separately indicated, and the service of facilitating payment is in addition to the training services provided. Thus, the collection and payment of examination fees to AAPC by the applicant for enrolled students are not liable to GST.

2. GST Liability on Collection and Payment of Examination Fees to AAPC for Outside Students Not Enrolled in the Applicant's Training Program:

For students not enrolled in the applicant's training program, the applicant still facilitates the payment of examination fees to AAPC without charging any service fee. The ruling again referred to Rule 33 of the CGST Rules, 2017, and Section 7 of the CGST Act, 2017, which defines "supply" as an activity/transaction for a consideration in the course or furtherance of business.

In this case, the applicant provides the fee payment facilitation service without any consideration. Since the service is provided without consideration, it falls outside the scope of "supply" as defined in Section 7 of the CGST Act. Therefore, the applicant is not liable to pay GST on the fee payment facilitation services provided to outside students without consideration.

3. Applicability of Karnataka Advance Ruling in M/s. Arivu Educational Consultants Pvt. Ltd.:

The applicant sought to follow the essence of the Karnataka Advance Ruling in M/s. Arivu Educational Consultants Pvt. Ltd., which held that the activity of collecting and remitting exam fees without value addition is a service as a pure agent and excluded from taxable value under Rule 33.

However, the ruling clarified that as per Section 97(2) of the CGST Act, the authority can only issue advance rulings on specific matters such as classification of goods/services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, registration requirements, and whether an activity amounts to supply. Since the question does not fall within these specified matters, the authority does not have jurisdiction to issue a ruling on this question.

Ruling:

1. The collection and payment of examination fees to AAPC by the applicant on behalf of students enrolled in their training program is not liable to GST, subject to the fulfillment of conditions under Rule 33 of CGST Rules 2017.
2. The collection and payment of examination fees to AAPC by the applicant on behalf of outside students (not enrolled in their training program) without collecting any service charge is not liable to GST for the reasons detailed in Para 7.7.
3. The authority does not have jurisdiction to issue a ruling on whether the applicant can follow the Karnataka Advance Ruling in M/s. Arivu Educational Consultants Pvt. Ltd. as detailed in Para 7.8.