2023 (7) TMI 809 - AAR - GST

Scope of supply - activities or services being provided by the University to its affiliated colleges and students - services rendered by a Government authority by way of any activity in relation to the functions entrusted to a Panchayat and Municipality - exemption under Entries 4 and 5 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and SRO 371/2017 dated 30.07.2017. Whether the services provided by the applicant to its affiliated colleges and students constitute a supply within the meaning and scope of supply as defined in Section 7 of the CGST Act, 2017? - HELD THAT - The definition of business under the GST Act is an inclusive definition and is so wide in its scope and amplitude that it not only covers all activities or transactions that were subjected to various taxes that were subsumed in GST but also functions undertaken by Central Government, State Government or Local Authority as such public authority. In the case of DAYAL SINGH ORS. VERSUS U.O.I. ORS. 2003 (1) TMI 712 - SUPREME COURT , the Hon'ble Supreme Court held that; where the language of the statute is clear and unambiguous, nothing can be read into it by implication and the intention of the legislature has to be gathered from the language used. In view of the plain and unambiguous definition of the term business in the CGST Act there is no need for recourse to construction or interpretation and the plain meaning of the statue has to be applied - Therefore, the services provided by the applicant to its affiliated colleges are covered by the definition of business in the CGST Act and consequently constitute a supply within the meaning and scope of supply as defined in Section 7 of the CGST Act, 2017. Whether the supply is exempted under the entry at SI Nos. 4 and 5 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017? - HELD THAT - The entry Nos. 17, 18 and 19 of Eleventh Schedule of the Constitution covers all types of education and education is also covered under entry No. 13 of the Twelfth Schedule of the Constitution. Therefore, education is a function entrusted to both Panchayath as well as Municipality under Article 243G and 243W respectively of the Constitution. University is a key institution of social change and development and the applicant being a Public University established under The Calicut University Act, 1975 an Act passed by the Legislature of the State of Kerala falls under the definition of Governmental authority in Para 2 (zf) of Notification No. 12/2017 CT (Rate) dated 28.06.2017. Therefore, the services provided by the applicant to its affiliated colleges are services by Governmental authority by way of activity in relation to function entrusted to a Panchayath and Municipality under Article 243G and 243 W of the Constitution and accordingly exempted from payment of GST as per entries at Si Nos. 4 and 5 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017.

Summary

Issues Involved:
1. Whether the activities or services provided by the University to its affiliated colleges and students fall under the "Scope of Supply" and are thereby exigible to GST.
2. If the activities are considered a supply, whether they are exempted under Entries 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and SRO 371/2017 dated 30.07.2017.

Summary:

Issue 1: Scope of Supply and GST Applicability
The applicant, a statutory university established under the Calicut University Act 1975, sought an advance ruling on whether its services to affiliated colleges and students fall under the "Scope of Supply" as defined in Section 7 of the CGST Act, 2017. The applicant argued that its activities are educational and not business-oriented, citing various Supreme Court judgments to support the claim that educational activities do not constitute business. However, the Authority for Advance Ruling (AAR) concluded that the definition of "business" under Section 2(17) of the CGST Act is broad and inclusive, covering activities by public authorities. Therefore, the services provided by the university to its affiliated colleges are considered a supply within the meaning and scope of Section 7 of the CGST Act, 2017.

Issue 2: Exemption under Notification No. 12/2017-Central Tax (Rate)
Having established that the services constitute a supply, the next issue was whether these services are exempt under Entries 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The AAR examined the definition of "Governmental Authority" and the relevant constitutional articles (243G and 243W) and schedules (Eleventh and Twelfth) that outline the functions entrusted to Panchayats and Municipalities, which include education. The AAR concluded that the university qualifies as a "Governmental Authority" and that its services to affiliated colleges fall under the functions entrusted to Panchayats and Municipalities. Therefore, these services are exempt from GST as per entries at SI Nos. 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Ruling:
1. The services provided by the applicant to its affiliated colleges constitute a supply within the meaning and scope of "supply" as defined in Section 7 of the CGST Act, 2017.
2. The services provided by the applicant to its affiliated colleges are exempt from payment of GST as per entries at SI Nos. 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.