2021 (9) TMI 158 - HC - GST

Liability to pay tax / GST - Validity of Rulings of AAR and AAAR - educational institution or not - applicant is a Charitable Society having the main object and factually engaged in imparting Medical Education - Requirement of registration under the Central Goods and Service Tax Act, 2017 - contention of the petitioner-society is that it has been established primarily for the purpose of imparting of education and that it does so, through its Special Purpose Vehicle viz. MGIMS - HELD THAT - To the extent the petitioner-society imparts education through its Special Purpose Vehicle-MGIMS, the society would also be eligible to be termed as educational institution and therefore, entitled for seeking exemption from the requirement of registration and GST liability, is the submission of the society. This contention of the petitioner, as seen from both the orders challenged here, has neither been considered nor has it been answered specifically by these authorities. The authorities ought to have considered this contention independently of the activity of MGIMS and in the light of the manner in which the aims and objects of the society is fulfilled by the petitioner-society. - Such exercise having not been done by the authorities below and no findings on these lines having been rendered by both the Authorities, both the orders, as rightly submitted by the learned counsel for the petitioners, are erroneous and cannot stand to the scrutiny of law. Petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Whether the petitioner-society qualifies as an educational institution for exemption from registration under GST Acts.
2. Whether the petitioner-society is liable for registration under Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017.

Analysis:
1. The petitioner-society contended that being primarily for education, it should be exempt from registration under GST Acts and service tax liability. Despite this, they sought an Advance Ruling from authorities. The Maharashtra Authority for Advance Ruling ruled against the society, stating it does not qualify as an educational institution. The Appellate Authority upheld this decision, leading to a challenge by the society. The High Court found that the previous rulings did not address the core question of whether the society, independent of its Special Purpose Vehicle, can be considered an educational institution. The High Court concluded that since the authorities failed to consider this crucial point, the orders were erroneous and quashed them.

2. The High Court emphasized that the key issue was whether the petitioner-society, on its own merit, could claim exemption from registration and GST liability as an educational institution. The authorities' reasoning that the society is not an educational institution due to education being provided by its Special Purpose Vehicle was acknowledged but deemed insufficient. The High Court highlighted that the society's establishment for educational purposes should entitle it to educational institution status. As the authorities did not address this argument independently of the Special Purpose Vehicle's activities, the High Court found the orders flawed and remanded the matter back to the Maharashtra Authority for Advance Ruling for a fresh decision within three months.

In conclusion, the High Court allowed the petition, quashed the previous orders, and directed a reevaluation by the Advance Ruling Authority. The petitioner-society was instructed to appear before the Authority, and interim relief was granted until a final decision is reached.