In Re: M/s. Omnisoft Technologies Private Limited
GST
2018 (10) TMI 301 – AUTHORITY FOR ADVANCE RULING, GUJARAT – 2018 (18) G. S. T. L. 144 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, GUJARAT – AAR
Dated:- 23-8-2018
GUJ/GAAR/R/2018/15 (IN APPLICATION NO. Advance Ruling/SGST&CGST/2017-18/AR/24)
GST
R.B. MANKODI AND G.C. JAIN, MEMBER
Present for the applicant : Shri Dhruvank Parikh, CA
The applicant M/s. Omnisoft Technologies Pvt. Ltd. (OTPL) is engaged in IT business and education sector, with thrust on the franchisee model. The applicant has submitted that in the non-IT field, it has ventured in diverse segments, which has also lead to overall skill development of children involved in the said field. It is submitted that with products like UC-MAS, UC-DinoArt, and UC-MLS from UCMAS Education Group Malaysia, the applicant has ensured that with the medium of using tools like ABACUS, Arts, Various Memory enhancing Techniques (like mental mapping, mnemonics, etc.)
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ion. They need to practice for about 30 minutes daily when they are home for the next 6 days.
2.2 It is submitted that UCMAS is a child development program based on Visual Arithmetic and Abacus that boosts brainpower in children aged 4-13 years. Along with strengthening math skills, the UCMAS approach promotes whole brain development and establishes foundational building blocks like memory, concentration, creativity and problem solving – core skills that inspire greater confidence and success in all subject areas and in life. The program equips them with the skills they need to improve overall academic achievement and to confidently meet life's challenges and achieve greatness. It is submitted that UCMAS is much more than developing number skills. Using Math as a medium and Abacus as a tool, this program helps developing basic cognitive skills and cognitive Executive Functions of a child. Cognitive skills are the core skills that the brain uses to think, read, learn, remember, reason,
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s as a teaching tool. By learning to perform mental calculations quickly and accurately, students aged 4-13 expand their mental capacity and develop skills such as multitasking, time management, memory, concentration and problem solving – skills that are crucial to success in all areas of study and in daily life. It is submitted that UCMAS not only leads to greater student proficiency and confidence in mathematics; it also builds the framework for children to develop fundamental learning skills essential to actively succeed in school and in every avenue of their daily life. UCMAS applies innovative pedagogical techniques developed by program specialists that include child development experts and child psychologists to leverage educational trends and to maintain a worldclass quality program that deliver the maximum benefit to the students. With the exciting classes and energetic instructors, the Company ensures that its students have fun as they learn.
3. The applicant has raised the f
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en the services are supplied in the course of inter-state supply of the said services for determining the rate of Integrated Tax applicable to the said services.
4.2 It is submitted that Entry No. 80 containing Heading 9996 in Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 issued by the Central Government exempts the levy of Central Tax on the Intra-State Supply of Services by way of Training or Coaching in Recreation Activities relating to:
(a) Arts or culture, or
(b) Sports by Charitable Entities registered under Section 12AA of the Income Tax Act.
The levy of State Tax on the above mentioned supply of services is Exempted by the Government of Gujarat vide Notification No. 12/2017-State Tax (Rate) dated 30th June, 2017 and similarly, the supply of said services mentioned herein above in the course of inter-state transaction is exempted vide Entry No. 83 containing Heading 9996 in Notification No. 09/2017-Integrated Tax (Rate) dated 28th June, 2017.
4.3 The app
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and problem solving – core skills that inspire greater confidence and success in life. Therefore, if certain specialized training is provided to make career in a particular field, and also the course involves specific certification from the institute rendering such training, then the facilitation of such education falls under the ambit of Recreation and development through various unique techniques (can also be referred as an 'Art of Development of Mind'). To elaborate further, it is submitted that UCMAS approach doesn't impart training in a way suiting a particular field like a person undergoing training in cricket to improve his skills to enable him to participate in various levels of tournaments. The ABACUS training program imparted by the applicant under UCMAS approach is mainly to create interest in students for more advance form of mathematics so as to enhance their thinking capacity and mental development.
4.6 The applicant submitted that the entire thing is done by employing m
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g mathematics and mathematical concepts. Under UCMAS, the applicant applies various methods to make learning of arithmetical skills enjoyable.
4.8 It is further submitted that Abacus taught under UCMAS which is a recreational activity relates to an 'art. ''Art' has again not been defined in the GST Act. ABACUS under UCMAS is not merely a method to improve the speed and accuracy of calculations but it is also an activity wherein the children undergoing training are developed with the other aspects of the mind. When the children have acquired an astonishing calculation speed, it is actually only the end result of having developed the mental capabilities interalia including concentration, observation, visualization, imagination and memory. Concentration is the concentrated and dedicated attention towards a particular matter with clear reflection that creates a deep image and mental impression. An enhanced concentration leads to a better absorption power. Studying will then be a joyful th
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brain would not stay long, but an image that is recorded in the right brain would stay on in the mind forever. By stimulating the right brain with mental arithmetic, and in combination with the alertness of the eyes, ears and hands, the ability to store and recall develops together.
4.9 From the above, the applicant submitted that Training Activity performed by the company under UCMAS using Abacus is a recreational activity relating to an art and thereby exempt from GST. Hence, the applicant is exempted under GST as per the above explanation and above quoted Notifications under the GST Act. Therefore, the applicant requested for advance ruling in the interest of deciding a common rate of Taxation for both the applicant as well as other subordinate Franchises in the GST Regime.
5.1 In the additional written submission, the applicant referred to Notification No. 9/2003-Service Tax dated 20.06.2003 and Notification No. 24/2004-Service Tax dated 10.09.2004. It is also submitted th
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on of the Government in the Notifications existing / prevailing in the current context seems similar considering the fact that the explanations to the earlier notifications being existed prior to introduction of negative list reflected the intention of the Government to provide exemption to commercial coaching institutes being qualified as recreational one and the meaning thereof according to government was clarified by way of an explanation in the said notifications to mean a commercial coaching or training center which provides training or coaching relating to recreational activities such as dance, singing, martial arts or hobbies.
5.3 The applicant submitted that the usage of the word 'art' in the prevailing regime should not hinder the benefit as envisaged by the Government and hence the activity of the applicant of teaching under UCMAS using Maths as medium and Abacus as a tool should get exemption in the interest of lakh of students undergoing / intending to undergo the training
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t is commonly used to describe something of beauty, or a skill which produces an aesthetic result.
6.3 It has been opined by the Vadodara – I Commissionerate that the activity performed by the applicant is a form of education imparted to the children to develop their interest and skills in mathematics and hence it is an education support service. It is submitted that it is not a system purely based on 'abacus', which is used to teach counting numbers to the children of pre-primary education, because the age group of children which are imparted education by the applicant are from 4-13 year and this range cannot belong to children of pre-primary schooling.
6.4 It has been further informed that the 'Educational Support Service' is classified under SAC 999294. It is submitted that the section 2(y) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 defines the 'educational institution and that private coaching centers or other unrecognized institutions, self-styled as edu
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. No. 83 of Notification No. 9/2017-Integrated Tax (Rate) issued under the Integrated Goods and Services Tax Act, 2017 (herein after referred to as the 'IGST Act, 2017') to the supply of services being made by the applicant.
9.1The said Sl. No. 80 of Notification No. 12/2017-Central Tax (Rate) reads as follows :-
Sl.No.
Chapter, Section, Heading, Group or Service Code (Tariff)
Description of Services
Rate (per cent.)
Condition
80
9996
Services by way of training or coaching in recreational activities relating to-
(a) arts or culture, or
(b) sports by charitable entities registered under section 12AA of the Income-tax Act.
Nil
Nil
Thus, as per Sl. No. 80 of Notification No. 12/2017-Central Tax (Rate) exempts services by way of training or coaching in recreational activities relating to arts or culture or sports. (In case of training or coaching in recreational activities relating to sports, exemption is admissible only when such services are by charitable entities registe
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of services prescribed vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, which are reproduced below.
Heading & Group
Service Code (Tariff)
Service Description
Heading No.9996
Recreational, cultural and sporting services
Group 99961
Audiovisual and related services
………
Group 99962
Performing arts and other live entertainment event presentation and promotion services
999621
Performing arts event promotion and organization services
999622
Performing arts event production and presentation services
999623
Performing arts facility operation services
999629
Other performing arts and live entertainment services n.e.c.
Group 99963
Services of performing and other artists
999631
Services of performing artists including actors, readers, musicians, singers, dancers, TV personalities, independent models etc
999632
Services of authors, composers, scu
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ng Musical, Visual and specialized effects does not make the activities of the applicant as the training or coaching in recreational activities.
11. The decisions of Hon'ble CESTAT referred to by the applicant pertain to Notification No. 9/2003-Service Tax and 24/2004-Service Tax issued under the Finance Act, 1994 (Service Tax), which are not pari-materia to Sr. 80 of Notification No. 12/2017-Central Tax (Rate). Further, against the decision of Hon'ble CESTAT in the case of Abacus Brain Study (P) Ltd. (supra), Civil Appeal Nos. 2558-2559 of 2012 have been filed in the Hon'ble Supreme Court, which are pending. As held by the Hon'ble Supreme Court in the case of Union of India Vs. West Coast Paper Mills Ltd. [2004 (164) E.L.T. 375 (S.C.)] = 2004 (2) TMI 344 – SUPREME COURT OF INDIA, once an appeal is filed before the Hon'ble Supreme Court and the same is entertained, the judgment of the High Court or the Tribunal is in jeopardy. The same view was held by the Hon'ble CESTAT in the case o
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