GST Case 5- Indian Institute of Management

GST Case 5- Indian Institute of Management

Can you imagine a student at IIM Bengaluru paying fees for his Post Graduate Programme (PGP) along with 18% GST and his friend at IIM Kolkata paying his fees for the same course without GST? Well if we go by the recent AAR Ruling of Karnataka and West Bengal, that is what exactly would happen.

Query:

IIM Bengaluru raised a query before AAR Karnataka that whether long-duration postgraduate diploma/degree-granting programmes offered by the Indian Institute of Management, Bengaluru other than specifically mentioned in Sl.No.67 of Notification No.12/2017 – Central Tax (Rate) dated 28th June 2017 are exempted from the GST output liability on education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force in the light of enactment of the Indian Institute of Management Act, 2017?

Facts:

IIM Bengaluru was registered as the society with Registrar of Societies, Mysore State (now Karnataka). IIM Act, 2017 was notified in the Gazette of India on 31st January 2018. By virtue of the enactment of IIM Act, 2017, IIM Bengaluru is now a body corporate as per Section 4 of the said Act.

The long duration programmes are now approved curriculum-based programmes by virtue of provisions of the IIM Act, 2017. Therefore, in light of above, all programmes offered by IIMB including executive programmes are covered under education as a part of a curriculum for obtaining a qualification recognized by the Indian Institute of Management Act, 2017 and thus will be covered under Sl. No. 66 of Notification No. 12/2017 – Central Tax (Rate) dated 28th June 2017 instead of Sl. No. 67.

Observation:

The two competing entries of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 relevant to the issue i.e. Entry no. 66 and 67 falls under the Heading 9992.

Entry at Sl. No. 66 is a general entry whereby all educational services provided by an institute, which leads to a qualification/degree, recognized by the law are exempt from GST. Entry at Sl. No. 67 specifically exempts IIM from payment of GST but only for courses mentioned therein. As Entry at Sl. No. 67 has been carved out specifically for IIM therefore, they have been segregated from all other educational institutes and educational services provided by them are subject to different treatment in terms of exemptions.

Held:

AAR held that for educational services provided by IIM, Entry at Sl. No. 67 alone shall apply. Constitution of Notification does not allow selective application of Serial No. 67 in respect of certain educational programmes and application of Sl. No. 66 for the rest of educational programmes.

Comment:

For the same courses in question in the above ruling, IIM Kolkata had also raised a query before AAR West Bengal whether courses are exempted from the purview of GST by virtue of entry at Sl. No. Entry 66(a) of Notification No. 12/2017 subsequent to the enactment of IIM Act, 2017.

AAR West Bengal in their Judgement relying on the principle that if benefits under more than one provision are lawfully available, assessee can enjoy the one more beneficial to him; held courses of IIM not covered under Entry 67 of Notification No. 12/2017 would be exempted from levy of GST by virtue of Entry No. 66(a) of Notification No. 12/2017.

AAR Karnataka however as can be observed from above have held otherwise and provided that constitution of notification does not allow selective application of Serial No. 67 in respect of certain educational programmes and application of Sl. No. 66 for the rest of educational programmes.

Therefore two differing judgments for the same Institution and for the same courses; imagine the plight of the students and Institution.

Why such chaos:

Section 103(2) of CGST Act, 2017 provides that the advance ruling referred to in sub-section (1) shall be binding on the applicant who had sought it unless the law, facts or circumstances supporting the original advance ruling have changed.

When two branches of one of the most coveted Institutions of India i.e. IIM refers a common matter before two benches of Advance Ruling Authority under CGST Law, what one would expect? Least would you expect that one bench of the AAR would ask one of the branches of IIM to charge 18% GST and another bench would ask them to not to charge GST and the later judgment to deviate from the previous one without any reasoning?

Where does it lead:

This again leads to the fact that India as a country needs single Advance Ruling Authority with binding precedents on the judgments and if at all deviation has to be made from the previous judgment delivered on the similar issue, reasons thereof should be given.