Categories: Legal Opinion

LEGAL OPINION ON COACHING INSTITUTE

2021-11-23 | admin

To:xxxxxxx
Re:GST IMPLICATION ON TUITION FEE RECEIVED BY A COACHING INSTITUTE RUNNING UNDER THE AEGIS OF A TRUST
Client:XXXX EDUCATION CENTRE
Client Representative:YYYYYYYYYYY
Meeting date:07.01.2021

On the above mentioned date, the mentioned person had raised his willingness to have legal validity and functioning opinion from us regarding the   GST IMPLICATION ON TUITION FEE RECEIVED BY COACHING INSTITUTE “ XXXX EDUCATION CENTRE”  RUNNING IN THE PREMISES OF .…UNDER THE AEGIS OF….” 

Education service is a taxable supply under GST being not specifically put out of GST Ambit. But few education services have been exempted via certain notification and entries under the act. To clearly ascertain the status of the service being provided by the XXXX Education Centre, we need to go through the notifications and certain rulings in context to the Education Service.

The Education service has been divided in six groups as per Service code of the GST i.e Group 9921 – Pre-Primary Education Services, Group 99922- Primary Education Services, Group 99923- Secondary Education Services, Group 99924 – Higher Education services, Group 99925- Specialized Education service and Group 99929 – Other education & training services and educational support services. Following is the detailed chart for the categorization in GST.

If we go through the literal meaning of the primary education service in India, it is up to standard VIIth, Secondary Education is till Standard Xth and Higher secondary Education is for XIth and XIIth standard. Therefore coaching education provided to students of Standard IXth and Xth will fall under Secondary education service with code 999231. 

The relevant Extract of the notification on taxability of education service is being reproduced below:

While perusal of the extract, it is pertinent that Education services under Chapter 9992 i.e all Education services are taxable at the rate of 18%. Though the notification extract further classifies few education servicers as exempt or are taxable at lower rate. Serial no.66 of the Notification No. 12/2017- Central tax (Rate) dated 28.12.2017 is relevant to the opinion to be formed regarding taxability of the Coaching institute as other entries are regarding higher education or vocational training which are irrelevant to the category of education service provided by the client.

Entry No 66 of the notification clearly exempts the education service provided by “Educational Institution” to its students. Point (a) of the entry says “Service provided by an Educational institution to its students, faculty and staff are taxable at nil rate of tax”. Further in Point (b), it has exempted few input services also which are being received by the Educational Institution with a proviso below that “ Nothing  contained in entry (b) shall apply to an Educational Institution other than a institution providing services by way of pre-school education and education up to higher secondary school or equivalent. Which means that exemption listed under Entry 66(a) is applicable to all the Educational Institutions irrespective of their category. Therefore we need to analyze whether the XXXX coaching Institute is an Educational Institution or not as per the act. 

“Educational Institution” has been defined in 2(y) of the Notification no 12/2017 – CGST (Rate) dated 27.06.2017 and the same read as under:

2(y) “educational institution” means an institution providing services by way of,-

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course;

The client is running a private institute and is engaged in providing the service of teaching to the students of class IXth and Class Xth. This activity prepares the students for upcoming Xth board examination which are being conducted by other institution. On prima facie consonance of the definition of Educational Institution, we need to see whether the XXXX coaching do fall under any of the category prescribed under the definition.

i) Is XXXX coaching Institute providing Pre- school education or education up to higher secondary school or equivalent?

Though the coaching institute is providing education to the students of Class IX the and Xth which on one hand could be said as education up to higher secondary. But the Coaching institute is not a school and clause 2(y)(i) only includes school. Therefore the client cannot be termed as Educational Institution under the clause 2(y)(i).

ii.  Is Education imparted by a client a part of the curriculum for obtaining a qualification recognized by any law for the time being in force?

“Education as part of the curriculum for obtaining a qualification recognized by any law” is a very wide term and has not been properly defined under the act. But as this legacy has been passed from the service tax regime, therefore assistance could be taken from the education guide of the CBIC. According to which conduct of degree courses by college, universities or institutions which lead grant of qualification recognized by law would be covered under this definition. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification.  The institute is providing coaching to students of Class IXth and Class Xth which could be termed as supporting education or an extra support for completing their syllabus. It is not having any curriculum and is not conducting any examination for providing any degree or qualification recognized by the law. Therefore the client cannot be termed as Educational Institution under the clause 2(y)(ii)

iii. Is their education part of an approved vocational education course?

The notification No. 12/2017-CGST (Rate) dated 27.06.2017 clearly defines vocational education courses as (a)  A course run by ITI or an ITC affiliated to the  National Council for Vocational Training or State Council of Vocational Training offering courses in designated trades notified under the  Apprentices Act, 1961    (b) A modular Employee skill course, approved by National Council of vocational training, run by a person registered with Directorate General of Training, Ministry of Skill development and Entrepreneurship. As XXXX institute is neither a ITI nor a Modular Employee Skill Centre, therefore they cannot termed as Educational Institution under the clause 2(y) (c) As XXXX coaching institute does not pass through the above listed litmus test, therefore they cannot be termed as Educational Institution under the act. The exemption under the act could have been claimed by the client if they, somehow, qualified as an Educational Institution. 

Also, on similar issue, an Advance Ruling was taken by “Simple Shloka Tutorials” before AAR- Maharashtra.  The Assessee had asked “Whether the services related to providing the coaching for entrance examination will come in the ambit of Goods and Service Tax? The Authority taking almost a similar stand answered in the affirmative and said that rate of tax shall be applicable at the rate of 9 percent under CGST ACT, 2017 and 9 percent under MGST ACT, 2017. The Copy of the Ruling is being attached

Conclusion

XXXX coaching institute is a private institute which cannot be termed as Educational Institution under the GST Act. It is providing an education service which is not exempted via any notification and is purely taxable under the act which embarks them as a taxable person under the act. Therefore, the institute should apply for the GST registration and it is also advisable to deposit GST on service provided prior to registration with the government along with interest. 

The views represented are solely my personal views according to my interpretation of law. It may vary person to person and shall not be categorized or used for any legal reference for any proceeding or hearing. We have been asked by our Client to present our opinion as stated in this letter.

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