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TMI Blog2018 (10) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration attract nil rate of taxes under the GST law - there are three elements involved as under which have to be satisfied by the applicant to be eligible to avail the benefit of Entry No. 72 of Notification No. 12/2017:-1. Services should be provided to the Central Government, State Government, Union territory administration; 2. under any training programme and 3. for which total expenditure is borne by the Central Government, State Government, Union territory administration. Services should be provided to the Central Government, State Government, Union territory administration - Held that:- The applicant has entered into a contract with Maharashtra State, for a period of 5 years, for implementation of the ICT @ school project in Government and Government aided higher secondary schools across the State of Maharashtra. In the preamble of the contract it is mentioned that “In its pursuit to improve the quality of education in Secondary and Higher Secondary schools of Maharashtra, the supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s part of the contract, but the said service is not the pre-dominant/ principal supply. In fact as seen above the contracted supply has many distinct supply components out of which training is a small component - as per para 1(c) of Schedule II of the SGST/CGST Act, any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service - the second condition/pre-requisite is also not satisfied. Services supplied for which the total expenditure is borne by the Central Government, State Government, Union Territory administration - Held that:- From a plain reading of the terms of the contract that payment for the work done is to be made by DE(S&HS) which is a department of the State Government. Thus the source of funding the expenditure is the State Government. Thus there is no dispute in respect of fulfillment of this condition but as per discussions above, the other two conditions of Notification are not satisfied. When the language of a taxing statute is clear, if the conditions of supply falls within the four corners of statute allowing exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a public limited Company incorporated in India and registered under the Companies Act, 1956. The Applicant having GSTIN 27AABCI2106H1Z0 is registered in Mumbai, Maharashtra and falls within the jurisdiction of Mumbai Nodal Division-5, Maharashtra. The Applicant is the social infrastructure arm of IL FS group and is engaged in the key areas of education, Skill development, healthcare and cluster development for long term and sustainable impact. 2. Inter alia, the Applicant is working with various State or Union Territory Governments to promote computer training among the students and teachers of the government and government aided higher secondary schools under the Information and Communication Technology ( ICT ) @ School Project (hereinafter referred to as ICT Project ). Overview Of ICT Project 3. Information and Computer Technology ( ICT ) is universally acknowledged as an important tool for improving the quality of education. Realizing the importance of ICT and the vital role that it plays in educational sector, the Government of India framed nationwide policy viz. National Policy on Education, 1986 (as modified in 1992) (hereinafter referred to as the old polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be responsible for defining norms, standards, guidelines and framework to facilitate and monitor the implementation of the scheme in an effective manner. Thus, primary responsibility of implementing ICT Projects is on the State or Union Territory Governments. 8. However, while framing the policy, standards, norms, etc. for implementation of ICT Projects, the State or Union Territory Governments would be guided by the national level policy framed by the Ministry of Human Resource and Development, Government of India. This is to ensure uniform and high standards, optimum utilization and cost-effective implementation of ICT Projects. Thus, the State and Union Territory Governments have to implement Projects in accordance with the guidelines issued by the Central Government in this regard. 9. As the State or Union Territory Government is required to implement ICT Projects in accordance with the guidelines issued by the Central Government, almost all states have been following the PPP model by sourcing out the ICT Project work to the private parties under the BOOT model (as suggested by the Central Government). 10. Thus, as a matter of fact, throughout the nation, the States ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for imparting computer training. For this, the Applicant is required to provide one teacher, having specified qualifications and experience, to each school. The teachers so appointed would utilize the available ICT infrastructure (i.e. the ICT lab so created by the Applicant) for imparting computer training to the students in accordance with the curriculum developed in this regard by the Director, Pune as per Annexure-Ill to the agreement. 17. Annually, the appointed teacher shall also impart necessary training to at least 5 school teachers including the headmaster/headmistress of the school in computer aided learning and computer education with the usage of available ICT infrastructure. Further, the applicant shall impart technical training to the subject teachers for a period of ten days per year for normal operation, installing and use of textbook based educational software, computer education software, additional educational software, school management software, common software applications. 18. Moreover, it is also the responsibility of the Applicant to maintain and upkeep the ICT labs in proper working conditions for the entire contract period at its own cost. For this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to applicability of a notification issued under the CGST Act, 2017 are eligible to be posed for advance ruling before the Advance Ruling Authority in terms of Section 97(2)(b) of the CGST Act, 2017. Hence, present advance ruling application is maintainable before the Hon ble Authority of Advance Ruling, ISSUE(S) REQUIRING ADVANCE RULING: 23. The Applicant submits the following question for Advance Ruling and their interpretation on the question is as under: a. Whether the services provided by the Applicant to the Government secondary and higher secondary schools under the ICT Project, are covered under the scope of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (hereinafter referred to as Notification No. 14/2017 )? Applicant s understanding: 24. In the understanding of the Applicant, the activities undertaken by the Applicant under ICT project would be covered under the scope Of Entry 72 of Notification No. 12/ 2017, for the reasons furnished herein below: Applicable provisions: Notification No. 12/2017 Notification No. 12/2017 provides for the exemption for intra-State supply of services of des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A detailed explanation of the activities carried out by the Applicant is already provided in the facts above (Annexure I to the present application). 31. At this juncture, it is essential to analyse whether all the above referred activities carried out by the Applicant would qualify as supply of services under the training program or not? 32. In order to answer this question, it is pertinent to understand true nature, scope and extent of the activities undertaken by the Applicant in the implementation of ICE Projects under the ICT in Schools scheme. All the activities undertaken under ICT Projects are naturally bundled 33. It has been explained in the facts of the instant matter (Para 6-9 of Annexure I to the application) that the national level policy framed by the Central Government for implementation of ICT Projects provides that the State Government(s) should preferably follow BOOT model. 34. This suggestion of the Central Government is in fact being followed by the State Governments. Multiple state governments, as mentioned in facts also, are awarding the contracts for implementing ICT Projects on BOOT model only. In all such cases, the private parties are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is engaged in single supply of computer training services to the state of Maharashtra. The ICT in Schools scheme has been introduced with an aim to promote computer literacy among the students and teachers 41. The above argument that the entire infrastructure is developed to provide computer training is also supported by the policies framed by the Central as well as State Government in this regard. 42. The vision and mission statement in the new policy provides that the scheme has been introduced in schools with an aim to promote computer literacy and technologically-aided education among the students as well as teachers. 43. The preamble to the agreement clearly provides that the supply of computer hardware, software, faculty and provision of education services under BOOT model are in pursuit to improve the quality of education in secondary and higher secondary schools of Maharashtra. 44. On a careful perusal of the new policy issued by the Central Government and the preamble of the agreement, it is abundantly clear that the prime object behind this scheme is to promote computer literacy among students and teachers. Thus, the main thrust under this scheme is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hardware by the State Governments would be the last resort. Moreover, the State Government(s) opting to implement the ICT Project under Outright purchase method would be required to give a detailed justification as to why BOOT model is not opted. 49. It has been experienced in the past that the Outright Purchase of Assets helped in creation of assets or infrastructure, but in absence of the qualified teachers or trainers, such infrastructure was never utilized for imparting education and resultantly, the assets would eventually have become obsolete. Not only this, even the Government was not technically equipped to operate and maintain the computer systems (both hardware and software) to ensure smooth implementation of ICT Projects. Thus, it failed to achieve the object of imparting computer training to the students and teachers. 50. Therefore, keeping in mind the past experience, BOOT model is preferred and outright purchase of assets is kept as the last resort. The Applicant submits that the above discussion is to bring to the notice of the Hon ble Advance Ruling Authority that the focus under the BOOT model and the present agreement of the Applicant with the State of Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, in view of the above discussion it is clear that the entire infrastructure is owned by the Applicant and the repair and maintenance activities undertaken by the Applicant are in regard to the self-owned equipment. Therefore, there is no supply of maintenance or operation services by the Applicant. 56. In fact, the repair and maintenance of the equipment and infrastructure is performed by the Applicant so that it may continue to provide computer training during the contract period in a smooth manner without any obstruction. There is no supply of goods during the period of contract 57. The activities undertaken by the Applicant are under BOOT model basis and therefore, the ownership in the infrastructure developed by it would be transferred after the expiry of the contract period (i.e. 5 years). This is also clearly provided in the tender notice that the ownership of the entire hardware, software, other equipment, etc. will be transferred by the Applicant to DE(S HS) at a nominal value of Re. 1/- at the end of the contract period. 58. In view of the above, it can be concluded that during the entire period of contract, the Applicant is not engaged in the supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicraft; 2. a course of diet and exercise for developing physical strength, endurance or dexterity; (v) Oxford Dictionary of English, third edition Training means the action of teaching a person or animal a particular skill or type of behaviour 62. On a careful perusal of the above referred dictionary meaning. it can be understood that in common parlance, training is generally used to refer to practical instruction or learning process. It also means practical guidance given for developing skills or the action of teaching or giving instruction in a particular subject to enhance skills. 63. It is to be noted that under the erstwhile service tax regime, the services in the nature of commercial training and coaching provided by commercial training and coaching institutes were taxable and the term commercial training and coaching was also not defined under the Finance Act (both under the positive and negative regime). Further, the courts had, at various occasions, interpreted the term training used therein and distinguished it from education. 64. In this regard, reference is made to the decision of Hon ble Tribunal (Larger Bench) in the decision of Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed therein, is neither defined nor qualified by adding any conditions viz. content, syllabus, periodicity, etc. Thus, once it is established that the services are in the nature of imparting skills or knowledge, the same would amount to training services for the purpose of entry No. 72 of Notification No. 12/2017. 70. It is already discussed in detail that the Applicant is engaged in providing computer related skills to the students as well as teachers. Thus, it is abundantly clear that the services provided by the Applicant viz. computer related training to the students as well as teachers under ICT Project would squarely fall within the ambit of term training used in Entry No. 72 of Notification No. 12/2017 irrespective of the tenure, syllabus, content, etc. of the Project. 71. In view of the above discussion, it can be inferred that the first pre-requisite of the Entry No. 72 of the Notification No. 12/2017 is fulfilled. The services are provided to Government of State of Maharashtra 72. The second pre-requisite of Entry No. 72 of Notification No. 12/2017 is that the services are to be provided to the Central or State or Union Territory administration. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure is to be borne by the Central or State or Union Territory Government administration. As per Para 3.1.3 of the revised guidelines, the total expenditure on this programme is borne by the Central and State/UT Government in the ratio of 75:25 except for the NER states including Sikkim where it is 90:10. This information is also available at the website of MHRD. A screenshot of the relevant page of the MHRD website is enclosed as Annexure-F. 78. Therefore, the third pre-requisite of the Entry No. 72 of Notification No. 12/2017 is also fulfilled. ISSUES REQUIRING ADVANCE RULING AND APPLICANT S UNDERSTANDING: In the light of aforementioned, the Applicant seeks to enter the following question for Advance Ruling and its interpretation of the question will be as under: Question : Whether the training services provided by the Applicant are covered under the scope of Entry No. 72 of Notification No. 12/2017? Applicant s Understanding: The Applicant is providing computer training services to the Government of Maharashtra and the whole expenditure in regard to such training programme, is borne by the Central Government as well as the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72. Heading 9992 Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration. Nil Nil 5.4 We observe that as per Entry No 72 pertaining to Heading 9992, Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration attract nil rate of taxes under the GST law. 5.5 From a reading of the description mentioned in column 3 of the above mentioned table we find that there are three elements involved as under which have to be satisfied by the applicant to be eligible to avail the benefit of Entry No. 72 of Notification No. 12/2017:- 1. Services should be provided to the Central Government, State Government, Union territory administration. 2. under any training programme. 3. for which total expenditure is borne by the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply the multimedia base computer aided learning software.... The said portions of the contracts clearly envisage a situation of supply of both goods and services and not services only. For the contract to fall under Services provided to... there should be only services rendered and no supply of goods which is not so in this case. To summarise, the applicant has entered into a contract with Maharashtra State, for a period of 5 years, for implementation of the ICT @ school project in Government and Government aided higher secondary schools across the State of Maharashtra. In the preamble of the contract it is mentioned that In its pursuit to improve the quality of education in Secondary and Higher Secondary schools of Maharashtra, the supply of computer hardware, software and connected accessories, Facult y and provision of IT Education Services in Government Secondary and Higher Secondary schools in the State of Maharashtra on Build, Own, Operate and Transfer (BOOT) Model is envisaged under the ICT @school scheme under Public Private partnership . As seen in the contracts the Applicant, has to procure, supply and install requisite number of IT equipment i.e. computer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and having distinctly separate components with distinct value attributable to each of the components for example:- 1. Procurement of hardware and software including computers. 2. Maintaining the same for a period of 5 years and then transferring the ownership of the property to DE(S HS). 3. Supplying of manpower in the form of teachers, etc. 4. Training the teachers and the students to create digital awareness. Further, we find that the applicant has stated that they are imparting computer skills to the students as well as teachers Also we see that the contract is for the supply of computer hardware, software and connected accessories along with the site preparation (i.e. vinyl flooring, furniture and fixtures, electrical fittings, power backup facilities, LAN, etc.), maintenance of equipment and provision of computer training services for 5 years in 1590 Govt, and Govt. aided high schools of Maharashtra under ICT @ school project for a certain contract value. Thus, the contract is clearly for supply of goods and services including training. It is a composite supply having distinctly identifiable components with distinct value attributable to each of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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