AP AAR: Coaching Classes Will Not Be Exempted From GST

Several Authorities for Advance Rulings (AAR) have held that GST will be charged on the coaching class services at 18% without any exemption.

The matter pertains to GST on private coaching for chartered accountancy as well as the cost and management accountancy courses. Several educational institutions and teachers provide coaching services such as regular, crash or revision courses with different fee structures.

Recently, the Andhra Pradesh AAR directed that no GST exemption shall be granted to M/s Master Minds. This proprietary concern runs an educational institution for higher secondary education, CA and CMA coaching to students appearing for exams. A similar advance ruling was pronounced earlier by the Maharashtra bench too.

Earlier, the applicant had migrated from the service tax regime into GST. However, the GST department had cancelled the migrated registration because educational services are exempt under GST as per entry number 66 of the Central Tax notification no. 12/2017 dated 28th June 2017.

The definition of an educational institution and the nature of exemption under GST continues to remain the same as the service tax law. An educational institution is defined as an institution providing educational services as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force.

The entry for exemption can be read as educational services provided by educational institutions to its students as a part of the curriculum recognised by law. The terms ‘education’ and ‘curriculum’ have not been precisely defined anywhere and can, therefore, be widely interpreted.

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The applicant further interpreted that his educational institution falls under the above definition and satisfies the exemption entry by elaborating the various stages of each course. 

The authority verified through the application and arranged for a personal hearing. The AAR highlighted that the applicant was not registered or accredited or authorised by the ICAI or ICMAI for imparting education. These statutory bodies are themselves engaged in training and coaching. The statutory bodies also issue a course completion certificate, not issued by the coaching centres. Moreover, the student may discontinue the coaching and study on his own to appear for the exams. Therefore, the coaching centre, Master Minds, cannot fit in the definition of an educational institution under the GST Act. 

Also, the services provided by them cannot guarantee or lead to the grant of a certificate under the law. Accordingly, GST continues to be charged at 18% on the education services provided by the institute applicant.

Another question that was raised by the applicant was regarding the food and accommodation services provided by the institute for the well-being of its students. Under the GST law, any supply of food and beverages made by the educational institute for its students and faculty are exempted under the entry number 66 of the Central Tax notification no. 12/2017 dated 28th June 2017. 

The authority held that the institute does not directly provide the food and accommodation services to the students as they are not made by itself. Further, since the applicant does not qualify as an educational institution, it cannot claim the GST exemption towards the supply of food and accommodation for the students. 

From the facts given above, it can be understood that the coaching centres and tutors cannot get a GST exemption on a stand that educational services are being provided. The pronouncements of an advance ruling apply to the respective applicants only as per law. Nonetheless, these can guide the rest of the taxpayers or entities functioning in a similar line of business or profession.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in