Tuition Classes For School Students Not Eligible For GST Exemption As Educational Institution: Gujarat AAR

The Gujarat Authority for Advance Ruling (AAR) has recently ruled that coaching services provided by Surat-based Friends Classes to students of Standards 5 to 12 are taxable at 18% GST and do not qualify for exemption available to educational institutions.

A bench of CGST Member Vishal Malani and SGST Member Sushma Vora held that the applicant did not fall within the definition of an “educational institution” under the GST exemption framework and therefore could not claim exemption from GST available to qualifying educational institutions.

Sanjaykumar Ishwerlal Sadadiwala, proprietor of Friends Classes at Adajan in Surat, had approached the authority seeking a ruling on whether coaching services provided to students studying under GSEB and CBSE curricula were exempt from GST or taxable as “commercial training and coaching services” under SAC 999293. The institute has been conducting tuition classes since 1984.

Before the authority, the applicant argued that the institute was engaged in providing the “basic service of education” by helping students from Standards 5 to 12 improve their academic performance and conceptual understanding.

It was further contended that education up to Standard 12 is a fundamental right and that levying GST on coaching classes would adversely affect economically weaker students seeking access to quality education.

The AAR examined Entry 66 of Notification No. 12/2017-Central Tax (Rate) and the definition of “educational institution” under Para 2(y) of the notification. The definition covers institutions providing pre-school education and education up to higher secondary level, education as part of a curriculum for obtaining a qualification recognised by law, or education as part of an approved vocational course.

The authority found that the applicant was imparting supplementary education through extra tuition classes intended to help students practise subjects already taught in schools and improve their performance in examinations.

“we find that the supplementary education provided by the applicant is NEITHER pre-school education and education up to higher secondary school or equivalent NOR education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force NOR 'education as a part of an approved vocational education course' and is therefore not covered under the definition of "Educational Institution" as defined under Para2(y) of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017,” the authority held.

Holding that Friends Classes did not qualify as an “educational institution” under the exemption notification, the authority ruled that the services would fall under Heading 9992 and specifically under SAC 999293 relating to “commercial training and coaching services”.

The AAR consequently held that the services are liable to GST at 18%, comprising 9% CGST and 9% SGST.