The Advance Rulings Appeal Authority (AAAR) of Kerala upheld an earlier ruling by the AAR that private institutes are not educational institutions that grant degrees or grant qualifications. The services offered by them to students to help them obtain a degree from a professional body would not benefit from a tax exemption and would be subject to taxes.
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The AAAR’s decision came in an appeal filed by the Logic Management Training Institute, Kochi, against a May order from AAR, Kerala. While approving the decisions of the AAR, the appeals authority stated that the appellant did not provide any primary or preschool education or up to upper secondary or equivalent level, and that he was not committed to providing education as part of an approved vocational education course, therefore, it cannot be classified as an âeducational institutionâ and subject to GST. In addition, he clarified that the conduct of degree courses by colleges, universities or institutions that lead to the granting of qualifications would be covered, and that training provided by private coaching institutes would not be covered, as a such training does not lead to the granting of a recognized qualification. Further, the appellant does not issue any valid course completion certificate or any CA, CMS, CS, ICWA diploma. Coaching at the appellant’s institution is not a mandatory compliance for an aspirant to pursue studies and obtain certificates, nor is it mandatory for the student to provide certification or appointment or to forward their application or registration through the appellant to the relevant statutory body for course certificate award, and the training provided by the appellant can help applicants pass the ICAI, ICWA, etc. tests / examinations, but does not in itself lead to the award of a certificate or diploma.
As a result, private coaching centers or other unrecognized institutions, although self-proclaimed as educational institutions, would not be treated as such under the GST and therefore could not benefit from exemptions, said the AAR.
She stated, however, that if the appellant’s activity led her to pay fees on behalf of students to recognize degree and diploma-granting institutions as pure agents and without charging a service fee, that amount could claim a GST exemption.
Further, the AAR stated that all of the consideration received by the appellant from the recipient of the services (i.e. enrolled students) as examination fees / other fees is subject to GST and adds that the accommodation facility provided by the appellant to students and the sale of textbooks to students, is considered a ‘Composite supply.