2018 (11) TMI 883 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (19) G. S. T. L. 369 (A. A. R. – GST) – Levy of GST – education and training programmes conducted through its 13 co-operative training centres and 33 district co-operative boards by charging fees to participants – non-profit making body – services provided by them are not in respect of their own students, faculty and staff – Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017.
–
Held that:- Section 24A is applicable to members of societies so that they can effectively understand participate in the management of the society. The said section also says that every society shall contribute annually towards the education and training fund of such State federal societies State Apex Training Institutes, notified under subsection (1), at such rates as may be prescribed, and different rates may be prescribed for different societies or classes of societies. Hence it is clearly
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
–
There appears to be no funding by the Government whether direct or indirect. The Societies Act referred above, vide Section 24A has laid down that every society shall organise co-operative education and training, for its members, officers and employees from the applicant or other notified institutes and every society shall contribute annually towards the education and training fund of the State federal societies or State Apex Training Institutes. Hence it is very clear that there is no funding by the Government in this case.
–
Services provided by them are not in respect of their own students, faculty and staff – Held that:- Services supplied /provided by an educational institution to its students, faculty and staff is exempt from GST – Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017. They are in fact supplying services to other cooperative societies and their members and not to their own faculty, etc. Hence there is no way tha
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
MBER PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by THE MAHARASHTRA RAJYA SAHAKRI SANG MARYADIT, the applicant, seeking an advance ruling in respect of the following question. The Maharashtra Rajya Sahakari Sangh Ltd. conducts education and training programmers through its 13 co-operative training centres and 33 district co-operative boards by charging fees to participants. Maharashtra Rajya Sahakari Sangh Ltd., is not profit making body and doing this activity as statutory requirement of Maharashtra Co-operative Societies Act, 1960. Therefore, it is requested to exempt GST to Maharashtra Rajya Sahakari Sangh Ltd. At the outset, we would like to make it clear that the provisions of both the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
eties. As per section 24 A of of M.C.S Act. 1960 and rules thereunder, every society has to give education & training through state apex training institute. Accordingly The Maharashtra Rajya Sahakari Sangh Ltd.is notified by the Government of Maharashtra on the 10 sep. 2014 for this purpose. Earlier, The Maharashtra Rajya Sahakari Sangh Ltd. was exempted by even income tax department. Income Tax tribunal order is enclosed for ready reference. As Maharashtra Rajya Sahakari Sangh Ltd.is doing work purely of education and training, it needs to be exempted from CST. This institute is not profit making organization and giving education and training by charging fees only. Anyway, Maharashtra Rajya Sahakari Sangh Ltd. is not doing commercial activity but catering needs of education and training as required u/s 24 A and rules thereunder i.e. rule 20B and 30A. Additional submissions on 05.07.2018 As Per our personal hearing dated 12.06.2018, we would like to pay attention to the following p
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ples of co. Operations. (Its State Level Apex cooperative institution). b. Educational institution existing solely for educational purposes and not for purposes of profit. C. Assessee has over 100 years of establishment and had the memorable association with the honourable Mohandas Karamchand Gandhi, father of our nation. d. Incorporation of the assessee has everything to do with the then ongoing cooperative movement during the period of the father of the nation and therefore, the main object of the assessee is to educate the people of India on the cooperative movement. Regarding finances to the trust, the assessee has by virtue of section 68 of the Maharashtra Co-op. Societies Act, every other member-society should mandatorily contribute annually towards the education fund of assessee as per the sums prescribed in the notification issued by the State Government. Such contributions to the education fund of the assessee are the sources of finance for the assessee-Sangh. Admittedly, the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
re relating to co-operation and to act as nodal agency in this respect h. The Government provided the finance to the assessee by way of making of a legislation, which cast statutory responsibility on the member societies by way of compulsory contributions to the education fund of the assessee. i. In the background of the above, the relevant provisions reads as follows, any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or As seen from the above, the legislature has not used the words such as direct or indirectly anywhere in the said clause meaning thereby the indirect financing by the Government is also a possibility not ruled out by the legislature. j. As per directive principles of the State policy mentioned in article 41 of the Constitution, it is the duty of the Government not only to establish educational institutions but also to effectives secure
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
available by the Government Such requirement was met in instant case. After setting-up infrastructure, the institute started imparting education and charged fees as prescribed by the Government. l. The finances received by the assessee in the form of training receipts from the member cooperative societies by way of compulsory subscriptions in accordance with a State legislation tantamount to financed by the Government . m. The instant assessee earlier has also got the requisite finance out of the exclusive Education Fund of the State Federal Society created by way of law in the name of Maharashtra Co-operative Societies; 1960, which is a legislative enactment of the State Government of Maharashtra. Thus, there exists legislative nod this legislative participation constitutes an essential ingredient of any financing by the Government. n. It is also relevant to mention that there is need for understanding the ingredients of the cooperative movement and the need for autonomy both in matte
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
olved in order to promote participation of the members and respect the financial independency of the movement in general and institution in particular. In any case, the provisions of the clause do not expressly bar the claim of tax exemptions to the cases of indirect financing by the Government in such cases of indirect financing to the educational institutions of the cooperative movement in India, the aspects of consolidated Fund of India to be the source of finance for claim of exemption become irrelevant for the reasons of minimum control of the Government on cooperative societies. Considering the peculiarities of the cooperative movement characterized by the members/people's participation financially and administratively, the role of audit becomes minimal as the contributing people/ members of the notified education fund/ societies provide necessary audit/check. In any case, there is always internal audit mechanism to such institutions to play the role of a watchdog. In any cas
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ng the case of the society engaged in the running the educational institution for promoting the cooperative movement in India, liberal interpretation of the statute is the need of the time. The cases of this kind, where the Government legislates law to provide for compulsory contributions by the member societies to an Education fund which is set apart to be the source of finance for an educational institution Of this kind engaged in the cooperative movement in India, which constitutes indirect financing by the Government. Statement containing the applicant's interpretation of law and/or facts, as the case may be, in respect of the questions(s) on which advance ruling is required On the similar lines of exemption granted to educational institutions registered under Trust Act , Maharashtra Rajya Sahakari Sangh Ltd. should be treated as educational institute and GST should not be levied. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be see
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
their claim, viz., Order dated 30.04.2010 by the Income Tax Appellate Tribunal, Pune Bench, it is seen that the taxpayer has been given the benefit of exemption only in respect of the funds received by the institution under section of the Act but were not granted exemption and denied registration under section 12AA (I)(ii) of the Income Tax Act, 1961 as a charitable trust. 4. Section 10 of the Income Tax Act, 1961 provides for income which shall not be included in the total income. Section provides that income of any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government does not include in total income. However the Appellate Authority in its Order dated 30.04.2010 has extended the exemption benefit stating that in cases where Government legislates law to provide for compulsory contribution by the member societies to an ' education fund engaged in cooperati
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ished by or under any Central Act, State Act or Provincial Act or a Government company is defined in clause (45) of section 2 of the Companies Act, 2013 (18 Of 2013)1; (h) any body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to co-operative societies; (j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act, 1860 (21 of 1860); (m) trust; and (n) every artificial juridical person, not falling within any of the above; 5.2 Under CGST Act, 2017, Section 7 (1), the definition of Supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such Club; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; 5.4 Under CGST Act, 2017, Section 2 (31), consideration in relation to supply of goods or services or both includes – (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
mparted. 7. Thus it appears that the said training is against a consideration, i.e., a payment made in money (fee collected from the members) for supply of services and thus the cooperative society also gets covered under the ambit of GST and is leviable to GST under Section 9(1) of the CGST Act, 2017. 8. This service provided by the taxpayer falls under the Service Accounting Code 999293 – Commercial Training and Coaching. In terms of Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017, Commercial Training and Coaching is subject to GST @ 18% (CGST 9% and SGST 9%) or IGST 18%. There has been no exemption granted / recommended to this service by the GST Council. 04. HEARING The case was taken up for preliminary hearing on dt. 12.06.2018, with respect to admission or rejection of the application when Sh. Dnynesh Shinde, C.A. along with Sh. Sadashiv Bodke, Chief Officer and Sh. Pranit Pansare Asstt. To Sh. Shinde appeared and requested for admission of application as per ARA. Th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ir 13 training centres, to the members of co-operative societies in the state of Maharashtra and the same is not a commercial activity. They have submitted that they do not receive any funds or grants from the Government directly and their funding is indirectly by way of mandatory contributions by the member co-operative societies under the provisions of Section 68 of the Maharashtra Co-op. Societies Act and they are not a profit making organization but only an educational institution and therefore on the similar lines of exemption granted to educational institutions registered under Trust Act', they should be treated as educational institute and CST should not be levied. The department has observed on perusal of the order dated 30.04.2010 by the Income Tax Appellate Tribunal, Pune Bench, submitted by the applicant in their favour, that they were not granted exemption and were denied registration under section 12AA of the Income Tax Act, 1961 as a charitable trust. For reasons ment
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ated 28-6-2017. We now reproduce Section 24 A of the Maharashtra Cooperative Societies Act is relevant in the present case as under:- 24A. Cooperative Education and training to members, etc. – (1) Every society shall organisc co-operative education and training, for its members, officers and employees through such State federal societies or the State Apex Training Institutes, as the State Government may, by notification in the Official Gazette, specify. Such education and training shall.- (i) en-sure the effective and active participation of the members in the management of the society; (ii) groom talented employees for leadership position; (iii) develop professional skills through co-operative education and training. (2) Every member of the committee, whether elected or co-opted, Shall undergo such co-operative education and training for such period and at such intervals as may be prescribed. (3) Every society shall contribute annually towards the education and training fund of the St
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
g such education/coaching/ training. We find from the submissions made by the applicant that they are neither providing any services to the Central Government, State Government, Union territory administration under any training programme nor is the expenditure borne by the Central Government, State Government, Union territory administration. In their case they are funded by the fees received from the societies for the training of their members. It is also seen from their submissions that they cannot be considered as an educational institution providing services to its students, faculty and staff and therefore the supply of services by them to the members of the cooperative societies do not get exemption given under Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-11 (Rate) both dated 28-6-2017. We find from the applicant's submissions that there is no contention whether their activity of providing training, etc to the members of the cooperative societies constitut
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
T – Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017. They are in fact supplying services to other cooperative societies and their members and not to their own faculty, etc. Hence there is no way that their remuneration recovered from the societies can be treated as non-taxable. From the submissions we find that the applicant are providing services of coaching and training to the members of cooperative societies for which they receive remuneration in the form of annual fees. These fees received by them from the societies can in no way be considered as an indirect funding from the Government. As per Section 7 of the CGST Act, 2017 the expression supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. As per Section 2(17)(e) of the Act, the applicant, who a
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
who pay annual fees and not to those societies who do not pay the applicant such fees. The applicant has submitted that The Maharashtra Societies Act, vide Section 24 provides for guidelines, which are mandatory for each and every Co-Operative Society in Maharashtra. The Applicant provides training to members of such cooperative societies which is in consonance with Section 24 of the said act, but this supply of service is provided only to those member cooperatives and not to non-members. We find that they have submitted that the guidelines are for the benefit of members of cooperative societies. The obligation to see that such training is provided to its members are on the cooperative societies and the Applicant provides training only as per the societies act and only to those societies who pay an annual fee to them. It is mentioned here that all the cooperative societies are obliged to follow the guidelines issued under the Maharashtra Societies Act and the applicant are providing tr
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
education and training they charge annual fees/contribution from their members as provided under the provisions of the Maharashtra Co-op. Societies Act. Thus in view of the above discussions it is seen that the applicant is a person (as defined under Section 2(84) of the GST Act, Who is supplying services (as defined under Section 7(1) of the GST Act) in the nature of educational, coaching and training to its members only (and not non members), for a consideration (as defined under Section 2(31)). The applicant is not funded in any way by the Government. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 11/2018-19/B-70 Mumbai, dt. 18/07/2018 For reasons as discussed in the body of the order, the questions are answered thus – Question :- The Maharashtra Rajya Sahakari Sangh Ltd. conducts education and traini
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =