In Re : IL & FS Education & Technology Services Ltd.
GST
2018 (7) TMI 755 – AUTHORITY FOR ADVANCE RULING – ODISHA – 2018 (14) G. S. T. L. 562 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING – ODISHA – AAR
Dated:- 20-6-2018
01/Odisha-AAR/18-19
GST
Ananda Satpathy and Nilanjan Pan, Member
Kapil Sharma, Advocate and Vineesh khanna for the Applicant.
Ruling
M/s IL & FS Education and Technology Services Ltd. (hereinafter referred to as the Applicant) assigned with GSTIN 21AABCI2106H1ZC having registered address at 51-KIIT, ITI Campus-14, Chandaka Industrial Estate, Khorda, Odisha-751024, have filed an application on 27.03.2018 under Section 97 of CGST Act, 2017 & OGST Act, 2017 read with Rule 104 of CGST Rules 2017 & OGST Rules, 2017 in Form GST ARA-01 seeking an Advance Ruling on the applicability of Entry No. 72 of Notification No.12/2017-Central Tax read with Entry No. 72 of Notification bearing SRO No. 306/2017-Finance Department, Government of Odisha to the servi
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nd Notification No.12/2017-Central Tax of Government of India have been issued u/s 11 of the OGST Act and CGST Act respectively exempting the notified services from levy of GST. Entry SI No. 72 of the said two Notifications exempts services provided to the Central Government or any State Government or any Union Territory Administration under any training program for which the total expenditure is borne by the Central Government or State Government or Union Territory Administration. By seeking an advance ruling on the applicability of Entry 72 to the business transactions of the Applicant, they implicitly seek a ruling on exemption of such transaction from the levy of GST.
1.2 As per the Scheme of Classification of Services, under the heading 9992 education services have been classified. This implies that the intended exemption vide Entry SI No.72 relates to educational training only. Again, under the heading 9992, the following services are also included under the detail head 999294 w
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ance Ruling, explained the facts and circumstances under which the supply order was received and how, as per their understanding, Entry 72 of Notification No.12/2017-Central Tax is applicable to their case. It was submitted that Odisha Madhyamik Shiksha Mission (OMSM), Government of Odisha, had mandated the Odisha Knowledge Corporation Limited (OKCL) to implement ICT project in 4000 government and government aided higher secondary schools across the State of Odisha. Accordingly, OKCL floated a tender notice on e-tendering portal of Secured e Tendering system (SeTs). The said tender was for Supply, Installation, Maintenance and Commissioning of Projection system, Interactive White Board, Computer Hardware, Connected Accessories, Installation of Software and other allied accessories, site preparation (i.e. vinyl flooring, furniture and fixtures, electrical fittings, power backup facilities, LAN, etc.), maintenance of equipment and provision of computer training services for 5 years in 40
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Applicant) for imparting computer training to the students in accordance with the curriculum developed in this regard by the Board of Secondary Education. After the expiry of the contract period (i.e. 5 years), the entire infrastructure (supplied and installed) will be transferred to the School and Mass Education Department (SMED), Government of Odisha at zero transfer value.
3. The Applicant, in their application dated 27.03.2018 raised the following question to be determined by the Authority for Advance Ruling:-
“Whether the services provided by the Applicant to the Government and government aided higher secondary schools under the ICT Project, are covered under the scope of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (hereinafter referred to as “Notification No. 12/2017″)”
3.1 The Applicant submits that they are carrying out various activities viz. installation, commissioning, site maintenance, operation, etc. to implement ICT Projects in the go
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and there is no possibility of performance of different activities by different vendors. This practice is being followed by the entire industry since the introduction of ICT Projects. The perspective of 'recipient of supplies here i.e. the Government of Odisha or other state governments in other cases, is to receive everything together as a bundle in all the cases. In other words, the state governments want one private party to implement ICT project in a wholesome manner. Therefore, in view of the industry practice and the expectation of state governments as recipient of supply, the Applicant is of the understanding that all the activities performed by the private parties under the BOOT model are naturally bundled.
3.2 They further submit that the infrastructure built by the Applicant is used by the teachers appointed by the Applicant to provide computer training to students as we'll teachers of the government id government aided schools. The entire infrastructure is being dev
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greement that the ownership of the entire hardware, software, other equipment, etc. will be transferred at zero value at the end of the contract period and therefore, they are not engaged in the supply of goods in as much as supply of goods is taking place after the expiry of 5 years. As regards supply of goods, they submitted that even if some value is to be attributed towards supply of goods (equipment/infrastructure), the supply of goods here is ancillary to the principal supply of computer training service and as discussed above, the basic idea of the ICT project implementation is provision of computer training to specific schools in the state of Odisha and not procurement of equipment/mere creation of infrastructure. Further, the agreement between OKCL and OMSM clearly provides that OKCL would be merely an implementing agency and would carry out the implementation work as per the guidelines/instructions of OMSM. Thus, it would be incorrect to say that the Applicant is providing se
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applicant sought time to reply. Therefore, another date for P.H. was fixed on 29.05.2018. Sri Vineesh Khanna, authorised representative of the applicant, appeared for personal hearing on 29.05.2018 and requested for a short adjournment. The request for adjournment was admitted and the next date of P.H. was fixed on 11.06.2018. The applicant through its Advocate and representative were heard on the said date in the matter and the contentions advanced were also examined. During personal hearing, Sri Kapil Sharma, Advocate re-iterated the earlier submissions and also submitted a fresh written submission pursuant to hearing on 03.05.2018 wherein, they inter- alia explained that they are engaged in imparting computer skills to the students as well as teachers. As far as students are concerned, they are taught computer as a subject wherein, various skills viz. operation of computers, using MS-Office, internet, etc. are given to them. The course curriculum of Information Technology subject wa
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1 The Applicant, in their fresh written submission, cited various judicial pronouncements which mainly decided the distinction between 'training' and 'education' i.e. what constitutes a training and what constitutes education. The issue under consideration being different from the distinction between 'training' and 'education', the cases relied upon are not taken to the ambit of the present proceedings. They have also submitted computer syllabus for Class 8, 9 and 10 students, samples of payment claim/bills, sample questions and report card of the students to substantiate their understanding and averment.
5. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by the representatives during personal hearings. We also considered the question & issues on which advance ruling is sought for by the applicant, relevant facts having bearing on the question/issue raised, the Applicant
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plain reading of the entry, it is clear that following three pre-requisites are to be satisfied in order for the supply to qualify for the notified exemption.
a. The supply has to be a supply of Service provided to the Central Government, State Government or Union Territory administration;
b. Such Service must be 'under any training program';
c. The total expenditure of such Service is borne by the Central Government, State Government or Union territory administration.
5.3 As regards the first pre-requisite as stated above, the state jurisdictional officer i.e Deputy Commissioner of State Tax, CT & GST, Bhubaneswar-III stated that OKCL was promoted by the Higher Technical Education Department, Govt of Odisha and was incorporated under the Company Act, 1956 on September, 2012 as a public limited company under CIN. U 72200OR 2011 PLC 014185 to create new paradigm in education and development through universalization and in
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ia 1949 does not apply to OKCL. They also contended that employees of OKCL are not public servants. Any dispute between the employees and the management of OKCL, (including the tortuous liability) shall be settled by the applicable Industrial Tribunals and Labour Courts and the Industrial Employment Standing Orders Act, 1946 shall apply to them. The employees of the Government are regarded as Civil servants. The liability of States for the acts of omission and commission committed by the Civil servants is governed by written or unwritten laws. Under the Constitution of India two Articles viz. Article 294 and Article 300 contain explicit and implicit provisions regarding tortious liability of State and suit against it. Article 300 of the Constitution of India provides that State can sue or be sued as juristic personality in the name of Union of India and Government of a State. Therefore, as contended by the State Jurisdictional Officer, OKCL is neither the State Government nor a part of
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necessary for us to see the legal status of OKCL. From the contract/agreement deed, it is obvious that OKCL is a public limited company incorporated and registered under the Companies Act, 1956 and having its registered office at Jaydev Vihar, Bhubaneswar-751013, Odisha. Thus OKCL is a company and not State Government/Central Government or Union Territory. The status of OKCL is not disputed.
5.5 Further, we also see that OKCL had invited a tender for supply of goods and various services and M/s IL & FS had been selected in the tender and awarded the contract by OKCL. Thus, as per the Contract, the Supply is being made to OKCL which is a body corporate and not to the State Government. Admittedly, the Government of Odisha is the ultimate service beneficiary but Entry at SI No.72 of the notification No. 12/2017 is very specific and it cannot be stretched or construed otherwise. Thus, the commercial Supply by the applicant is not to Government of Odisha but to OKCL, a separate distinct en
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to prepare the site (flooring, furniture and fixtures) to be used as an ICT Lab, procure, supply and install requisite number of .IT equipment i.e. computer hardware, software(provided by OKCL), Integrated Computer cum Projector, Interactive white Board, webcam, multi- functional printer, UPS, Servo, Generator etc. in the ICT Lab, to maintain and upkeep the ICT Labs in proper working conditions for the entire contract period along with deployment of manpower in the ICT Labs of 3409 nos. of Govt, and Govt. Aided High Schools to impart computer knowledge to the students and teachers in accordance with the curriculum developed by BSE, Odisha for a contract value of Rs. 617.18 Crore. Thus, the applicant is contractually obliged to make taxable supply of goods and services to the contracting party OKCL during the contract period. Further, the intention of the parties to the contract is not confined to provisions of rendering service under any training programme, but to create necessary inf
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y training programme”. In this regard the applicant was asked to furnish the course content, course duration and consideration receivable by the applicant for imparting the training. On being asked these aspects, the applicant inter-allia stated that they are imparting computer skills to the students as well as teachers and as far as students are concerned, they have submitted copy of quarter wise curriculum for Class 8, 9 and 10 students. They have also produced samples of payment claim/bills, sample questions and report card of the students. They also stated that the expenses incurred by them towards the salary component of the school coordinators across the State of Odisha approximately amounts to Rs. 37 Crores per annum.
5.8 We have carefully examined the submissions and documents provided by the applicant. We see that the contract is for supply, installation, maintenance and commissioning of projection system, interactive white board, computer hardware, connected accessories, ins
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ontract, but the said service is not pre-dominant or principal supply. In fact the contracted supply has three distinct supply components out of which training is a small component. Further, from the Bills/payment claim submitted by applicant. It is seen that most of the payment was towards supply of hardware and connected accessories, consumables, electricity, internet, petrol diesel, Telephone charges etc.
5.9 It has also been contended that during the period of contract, the infrastructure built by the Applicant remains property of the Applicant and in no case, the ownership of the infrastructure is transferred to the school or OMSM during the period of the contract. Even after the expiry of contract period, ownership of the entire infrastructure (supplied and installed) will be transferred to the School and Mass Education Department (SMED) but at zero transfer value. In the absence of consideration such transfer will not be a taxable supply. Thus, there was no supply of goods eith
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lear that as per the contract, payment for the work done is to be made by OKCL and not the state government, though the source of funding the expenditure is by the State Government.
It may be profitable to refer the judgement of the Hon'ble Supreme Court in the case of CIT v. Ajax Products Ltd. (1965) 55 ITR, 741, where it is held by the Hon'ble Court that:
“In a taxing statute, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing to be implied. One can only look at the language used. ”
Thus, it may be affirmed that when the language of a taxing statute is clear, if the conditions of supply falls within the four corners of statute allowing exemption, it is to be exempted. If not, tax is to be levied. No exemption can be granted by inference or analogy. No supply can be taxed or excluded from tax on the basis of intention or scheme of the Act.
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