KARNATAKA APPELLATE AUTHORITY FOR ADVANCE RULING
6th FLOOR, VANIJYA THERIGE KARYALAYA, KALIDASA ROAD, GANDHINAGAR, BANGALORE - 560009
(Constituted under section 99 of the Karnataka Goods and Services Tax Act, 2017 vide
Government of Karnataka Order No FD 47 CSL 2017, Bangalore, Dated: 25-04-2018)
BEFORE THE BENCH OF
SHRI. D.P. NAGENDRAKUMAR, MEMBER
SHRI. M.S.SRIKAR, MEMBER
No 12, Bannerghatta Road, Bangalore-560076.
PROCEEDINGS
(Under Section 101 of the CGST Act, 2017 and the KGST Act, 2017)
At the outset we would like to make it clear that the provisions of CGST, Act 2017 and SGST, Act 2017 are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act.
The present appeal has been filed under section 100 of the Central Goods and Service Tax Act 2017 and Karnataka Goods and Service Tax Act 2017 (herein after referred to as CGST Act, 2017 and SGST Act, 2017) by Indian Institute of Management, Bangalore, (herein after referred to as 'IIMB'/'Appellant') against the advance Ruling No. KAR/ADRG 25/2018 Dated: 25th Oct 2018.
Brief Facts of the case:
1. Indian Institute of Management, Bangalore was registered as a society with the Registrar of Societies, Mysore State and is recognized as a premier institute of higher learning and seat of academic excellence in the field of management. Consequent to the passing of the Indian Institute of Management Act, 2017 which received presidential assent on 31st December 2017 and came into force with effect from 31.01.2018, IIMB is now a body corporate as per Section 4 of the said Act. The object of the Act was to declare certain institutes of management to be institutions of national importance with a view to empower them to attain global standards of excellence in management, management research and allied areas of knowledge.
2. In the light of the enactment of the IIM Act, 2017, IIMB applied for an advance ruling before the Authority for Advance Ruling on 09.05.2018 on the following questions:-
a) Whether the long duration post graduate diploma/degree granting programs offered by the IIMB, other than those specifically mentioned in Sl.No 67 of Notification No 12/2017 CT(Rate) dated 28th June 2017 as amended by Notification No 02/2018 dated 25,h January 2018, are exempted from GST output liability, being 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 the enactment of the IIM Act, 2017?
b) Whether supply of online educational journals or periodicals to the IIMB is exempted from reverse charge liability of GST under Sl.No 66 of Notification No 12/2017 CT(Rate) dated 28,h June 2017 as amended by Notification No 02/2018 dated 25th Jan 2018. being 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 the enactment of the IIM Act, 2017?
3. Based on the facts submitted by the applicant, the Authority for Advance Ruling observed that entry Sl.Nos 66 and 67 of Notification No 12/2017 CT (Rate) dated 28.06.2017 relate to education services falling under Heading 9992; that Sl.No 66 of the said Notification is a general entry providing exemption to services provided by an educational institution and /or to an educational institution; that all educational services provided by an institute, which leads to a qualification/degree, recognized by the law, are exempt from payment of GST. Sl.No 67 has been carved out specifically for the educational services provided by IIMs; that IIMs have been segregated from all other educational institutes and the educational services provided by them are subject to different treatment in terms of exemptions; that in so far as educational services provided by IIMs are concerned, the provisions contained in Sl.No 67 alone shall apply; that the Notification does not allow selective application of Sl.No 67 in respect of certain long term educational programs and application of Sl.No 66 for the rest of the educational programs. In effect, the AAR held that when Notification No 12/2017 CT(R) provides for a specific entry for the IIMs at Sl.No 67, the provisions of Sl.No 66 shall not apply to them. As regards the second question, the AAR held that since this also relates to the applicability of entry Sl.No 66 in the light of specific entry at Sl.No 67, the same view holds good and therefore, the answer for the second question posed by the applicant is also in the negative.
4. Aggrieved by the ruling of the AAR. an appeal has been preferred before this Authority on the following grounds:
4.1 IIMB is an institution recognized worldwide as an institution of higher learning and seat of academic excellence in the field of management. IIMB currently offers the following 5 long duration programs which collectively develop entry and middle level management professionals for companies, government and non-governmental organizations.
Table 1
1
2
3
4
5
In addition to the above, IIMB also offers certificate programs of short and long term durations under Executive Education Programs for mid and senior level executives.
4.2. The Indian Institute of Management Act, 2017 was passed and received Presidential assent on 31st December 2017. The objective of the Act was to declare certain Institutes of management (of which IIMB is one) to be institutions of national importance and to empower them to grant degrees, diplomas and other academic distinctions or titles and to institute and award fellowships, scholarships, prizes and medals, honorary awards and other distinctions.
The Government notified the IIM Act which came into effect on 31st January 2018. With the enactment of the IIM Act, IIMB is now a body corporate as per Section 4 of the said Act.
4.3. Till 31st January 2018, the courses mentioned at Sl.Nos 1 and 2 of the Table above were exempted in terms of Sl.No 67 of Notification No 12/2017 CT(R) dated 28.06.2017 whereas the courses mentioned at Sl.Nos 3, 4 and 5 were taxable to GST. Post 31st January 2018, the courses mentioned at SI. Nos 3, 4 and 5 of the above table also become exempt from GST by virtue of Sl.No 66 of Notification No 12/2017 CT(R) dated 28.06.2017 since IIMs are considered as 'educational institutions' by virtue of being vested with the power to grant degrees, diplomas and other academic distinctions or titles. Therefore, with effect from 31st January 2018, all the courses offered by IIMB qualify for exemption under Sl.No 66 of the Notification No 12/2017 CT(R) since IIMB is recognized as an educational institution as they provide a qualification which is recognized by the IIM Act, 2017
4.4. A similar question was referred to the Authority for Advance Ruling, West Bengal by IIM Calcutta viz: whether, after the introduction of the IIM Act w.e.f 31.01.2018, the Applicant should be considered as an 'educational institution'? The AAR, West Bengal held that the Applicant is an 'educational institution' within the meaning of sub-clause (ii) of clause 2(y) of the exemption notification No 12/2017 CT(R) dated 28.06.2017 in terms of the IIM Act and the Applicant is eligible for benefit of exemption under Entry No 66(a) of the said Notification.
4.5. Placing reliance on the above Advance Ruling, the appellant states that they qualify as an 'educational institution' as defined under clause 2(y) of the Notification No 12/2017 CT (R) and are eligible for exemption under entry No 66(a) of the said exemption notification since IIMB is also recognized by the IIM Act and offers the same courses; that the CGST Act and the relevant Notification has not taken into consideration the enactment of the IIM Act, 2017; that based on the existing Notification No 12/2017 CT (R), exemption in Sl.No 67 will be applied for the courses mentioned in Sl.No 1 & 2 of the above Table and exemption in Sl.No 66 will be applied for the courses mentioned in Sl.Nos 3, 4 and 5 of the above Table. They further submitted that since IIMB qualifies to be an educational institution, supply of online journals and periodicals to IIMB should be exempted from reverse charge liability under Sl.No 66 of the Notification No 12/2017 CT(R). In view of the above submissions they requested that the order of the AAR may be set aside and the exemption be granted to them as an educational institution.
PERSONAL HEARING:
5. The Appellant was called for a personal hearing on 19.02.2019 and was represented by M/s Guru & Jana, Chartered Accountants. The CA reiterated the submissions made in the grounds of appeal and also relied on the CBIC Circular No 82/2019 dated 01.01.2019 which clarifies the applicability of GST on the various programs conducted by IIMs. He stated that as per the clarifications given by the CBIC, IIMB will now be considered as an educational institution and will be eligible for the exemption. As regards, the applicability of GST on the supply of online journals and periodicals, the authorized representative explained that IIMB procures online journals and periodicals both from abroad and from local publishers. However, since details of the transactions with regard to online journals and periodicals were not available, the authorized representative agreed to furnish further details regarding their claim for exemption under reverse charge.
5.1. The Appellant vide letter dated 27.02.2019 filed additional submissions to the present appeal wherein with reference to the import of online educational journals, they submitted that SI.No 10 of Notification No 09/2017 (IT) dated 28.06.2017 exempts services received from a provider of service located in a non-taxable territory by way of supply of online educational journals or periodicals to an educational institution, other than an institution providing services by way of (i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course. They stated that IIM subscribes to the online educational journals or periodicals for the benefit of its students and faculty members from within India and abroad. These journals are made available to authorized users such as persons affiliated with IIMB as students, faculty or employees. The authorized users may access and use the journals only for scholarly and research purpose; that in view of the above, the procurement of the online journals are eligible for the exemption under SI.No 10 of the Notification No 09/2017 (IT) dated 28.06.2017.
DISCUSSIONS & FINDINGS:
6. We have gone through the records of the case and taken into consideration the submissions made by the Appellant in their grounds of appeal and at the time of the personal hearing.
7. The two issues for determination before us are:-
a) Whether the long duration post graduate diploma/degree granting programs offered by the IIMB, other than those programs specifically mentioned in Sl.No 67 of Notification No 12/2017 CT(Rate) dated 28lh June 2017, are exempted from GST in the light of the enactment of the IIM Act, 2017?
b) Whether supply of online educational journals or periodicals to the IIMB is exempted from reverse charge liability of GST under Sl.No 66 of Notification No 12/2017 CT(Rate) dated 28,h June 2017 in the light of the enactment of the IIM Act, 2017?
8. Since both the issues revolve around the entries at Sl.No 66 and 67 of Notification No 12/2017 CT(R) dt 28.06.2017, we reproduce the relevant text of the said notification.
Table 2
66
(a) by an educational institution to its students, faculty and staff:
(b) to an educational institution, by way of-
(i) transportation of students, faculty and staff:
(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;
(iii) security or cleaning or housekeeping services performed in such educational institution;
(iv) services relating to admission to, or conduct of examination by, such institution; up to higher secondary:
Provided that nothing contained in entry (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.
67
(a) Two year full time Post Graduate Programs in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian Institute of Management;
(b) Fellow program in Management;
(c) Five year integrated program in Management
2. Definitions. - For the purposes of this notification, unless the context otherwise requires,-
(y) "educational institution " means an institution providing services by way of-
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
(iii) education as a part of an approved vocational education course;
9. The entry at Sl.No 66 of Notification No. 12/2017 CT(R) dt 28.06.2017 was amended vide Notification No 02/2018 CT(R) dt 25.01.2018. The amended entry Sl.No 66 with effect from 25.01.2018 reads as under:
Table 3
(a) by an educational institution to its students, faculty and staff; (aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee;
(b) to an educational institution, by way of -
(i) transportation of students, faculty and staff;
(iv) services relating to admission to, or conduct of examination by, such institution;
(v) supply of online educational journals or periodicals:
Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of preschool education and education up to higher secondary school or equivalent. "Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of-
(i) pre-school education and education up to higher secondary school or equivalent; or
(ii) (ii) education as a part of an approved vocational education course
10. As can be seen from Table 2, with effect from 1st July 2017, services provided to/by educational institutions were granted exemption under entry Sl.No 66. The term 'educational institution' has been defined in clause 2(y) of the said Notification to mean an institution which provides services of:-
(i) pre-school education
(ii) education up to higher secondary school or equivalent
(iii) education as part of a curriculum for obtaining a qualification recognized by any law for the time being in force
(iv) education as part of an approved vocational education course.
The question is whether IIMs will be considered as an 'educational institution' in terms of the above definition. If so, what is the significance of the entry Sl.No 67 which grants exemption specifically to IIMs? In order to answer this, let us look at the history behind the creation of IIMs. In order to cater to the need for suitable managers for the large number of public sector enterprises which were being established as part of independent India's industrial policy, the Planning Commission, in 1959, recommended the setting up of elite management institutes named the Indian Institute of Management. Since the setting up of the first IIM at Calcutta in 1961, many IIMs were set up over the years bringing the total number of IIMs in the country to 20. The IIMs were registered as societies under the Indian Societies Registration Act. Each IIM was autonomous and exercised independent control over its day to day functioning. The administration of the IIM and overall strategy of the IIMs was overseen by the IIM Council which was headed by the Minister for Human Resource Development. Being an autonomous body (not affiliated to any University), the IIMs gives a diploma on completion of the management courses conducted by them.
11. The two year Post Graduate program in Management offering the Post Graduate Diploma in Management is the flagship program across all IIMs. This two-year Post Graduate program in Management is equivalent to an MBA degree. The Fellow Program in Management is equivalent to a Ph.D. degree. Many IIMs offer Executive Education Certificate Program for working professionals. This Executive Certificate Programs are not considered as equivalent to any MBA. Only the diploma level programs are considered as equivalent to an MBA degree. Being Societies. IIMs were not authorized to award degrees (which as per Indian law can be conferred only by Universities and deemed to be universities) and hence. IIMs were awarding diplomas and fellowships in management. These diplomas and fellowships were only equivalent to an MBA or Ph.D. and the equivalence was not universally accepted. Since the diplomas and fellowships given by IIMs were not qualifications recognized by any law in India, they were not considered as an 'educational institution' in terms of the definition at clause 2(y) of Notification No 12/2017 CT(R). However, having due regard to the fact that certain programs of IIMs are akin to university degrees, the GST law has provided for a separate exemption to IIMs who provide the two year Post Graduate Program in Management, Five year integrated program in management and the Fellow Program in Management by virtue of entry SI.No 67 of the above said Notification. The Executive Development Program is excluded from this exemption since the certificate awarded for this program is not equivalent to any MBA degree or PhD.
12. With the introduction of the Indian institute of Management Act, 2017, IIMs were declared as institutions of national importance and were given the power to confer degrees. The IIM Act, 2017 received Presidential assent on 31st December 2017 and the provisions of the Act came into force on 31st January 2018. Since IIMs can award degrees recognized by law with effect from 31st January 2018, they are now considered as an 'educational institution' as defined under clause 2(y) of Notification No 12/2017 CT(R). Therefore, during the period 1st July 2017 to 30th January 2018, IIMs cannot be termed as 'educational institutions' since they were not qualified to award degrees which were recognized by law. During the said period, the IIMs were eligible for exemption under a separate entry at Sl.No 67 in respect of 3 educational programs provided by them. The intention of the law in providing a separate exemption specifically for IIMs makes it evident that IIMs were not considered as an 'educational institution" as defined in clause 2(y) of the Notification No 12/2017 CT(R) and hence not covered under the entry Sl.No 66 for the period 1st July 2017 to 31m January 2018. This has been clarified by the CBIC vide Circular No 82/01/2019 GST dated 01.01.2019.
13. All IIMs (which includes IIMB) became eligible for exemption as an educational institution with effect from 31st January 2018 under entry Sl.No 66 of Notification No 12/2017 CT(R). However, post 31st January 2018, the exemption under Sl.No 67 loses its relevance since the IIMs are now covered under the entry Sl.No 66. However, the entry Sl.No 67 was deleted only with effect from 01.01.2019 vide Notification No 28/2018 CT (R) dated 31.12.2018. Therefore, during the period 31st January 2018 to 31st December 2018 both the entries at SI. No. 66 and 67 were in force granting exemption to the services provided by IIMs. It is trite law that if there are two or more exemptions available to an assessee, he can claim the one which is more beneficial to him. Therefore, during the period 31st January 2018 to 31st December 2018, IIMB can avail the exemption under either Sl.No 66 or Sl.No 67 of Notification No 12/2017 CT(R) dated 28.06.2017 as amended. This has also been clarified by the CBIC vide Circular No 82/01/2019 GST dated 01.01.2019. The relevant para of the Circular is reproduced hereunder:
5. For the period from 31st January, 2018 to 31st December, 2018, two exemptions, i.e. under SI. No. 66 and under Si No. 67 of notification No. 12/ 2017- Central Tax (Rate), dated 28.06.2017 are available to the IIMs. The legal position in such situation has been clarified by Hon'ble Supreme Court in many cases that if there are two or more exemption notifications available to an assesses, the assessee can claim the one that is more beneficial to him. Therefore, from 31st January, 2018 to 31st December. 2018, IIMs can avail exemption either under SI. No 66 or SI. No. 61 of the said notification for the eligible programmes. In this regard following case laws may be referred-
i. H.C.L. Limited vs Collector of Customs [2001 (130) ELT 405 (SC)]
ii. Collector of Central Excise. Baroda vs Indian Petro Chemicals [1997 (92) ELT 13 (SC)]
iii. Share Medical Care vs Union of India reported at 2007 (209) ELT 321 (SC)
iv. CCE vs Maruthi Foam (P) Ltd. [1996 (85) RLT157 (Tri.) as affirmed by Hon'ble Supreme Court vide 2004 (164) ELT394 (SC)
14. In this case, the Appellant had sought a ruling whether, pursuant to the enactment of the HM Act, 2017, the long duration post graduate programs will be exempt from GST under Sl.No 66 of the Notification No 12/2017 CT(R). We hold that, with effect from 31st January 2018, the long duration post graduate diploma/degree programs offered by IIMB, where a degree/ diploma is conferred as recommended by the Board of Governors as per the power vested on them under the IIM Act, 2017, will be eligible for exemption from GST by virtue of Sl.No 66 of the Notification No 12/2017 CT(R) dated 28.06.2017 as amended.
15. As regards the second issue regarding supply of online educational journals or periodicals to the IIMB, the question on which the Appellant sought a ruling was whether such supply of online journals and periodicals to IIMB are exempt from reverse charge liability. The plea of the Appellant is that since they are to be considered as an 'educational institution' post enactment of the IIM Act, 2017, the supply of online journals and periodicals to their institution should be given the benefit of exemption under Sl.No 10 of Notification No 09/2017 IT(R). The relevant extract of the Notification No 09/2017 IT (R) dated 28.06.2017 as amended by Notification No 02/2018 IT (R) dated 25.01.2018 is reproduced below:
Notification No 09/2017 IT (R) dated 28.06.2017
G.S.R (E).- In exercise of the powers conferred by sub-section (1) of section 6 of
the Integrated Goods and Services Tax Act. 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the inter-State supply of services of description as specified in column (3) of the Table below from so much of the Integrated Tax leviable thereon under sub-section (1) of section 5 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:-
Table
10
(a) ------------------;
(b) ------------------; or
(ba) way of supply of online educational journals or periodicals to an educational institution other than an institution providing services by way of- (i) pre-school education and education up to higher secondary school or equivalent; or
(ii) education as a part of an approved vocational education course;
16. The Appellant in their additional submissions have stated that they subscribe to online journals and periodicals for its students and faculty, both from within India and abroad. The exemption as per the above Notification is applicable to an educational institution (other than pre-school educational institutions, institutions offering education up to higher secondary school or equivalent and vocational educational institutions), when they receive online journals and periodicals from a supplier located in a non-taxable territory. We have already concluded that IIMB is an educational institution as defined in clause 2(y) of the Notification No 12/2017 CT (R) dated 28.06.2017 and it is an educational institution which offers a qualification recognized by law. Therefore, the receipt of online journals and periodicals by IIMB from a person located in a non-taxable territory will be eligible for exemption from payment of IGST in terms of Sl.No 10 of Notification No 09/2017 IT (R) dated 28.06.2017 as amended.. In the case of online journals and periodicals received by IIMB from domestic service providers, the exemption from payment of GST will be available to the domestic suppliers on intra-state supplies by virtue of Sl.No 66 (b) (v) of Notification No 12/2017 CT (R) dated 28.06.2017, and exemption on inter-state supplies will be available vide Sl.No 69 of Notification No 09/2017 IT (R) dated 28.06.2017 as amended vide Notification No 02/2018 IT (R) dated 25.01.2018.
17. In view of the aforesaid discussions, we set aside the ruling dated 25.10.2018 of the Karnataka Authority for Advance Ruling and answer the questions in the following manner:-
a) Pursuant to the enactment of the IIM Act, 2017, with effect from 31st January 2018, the long duration post graduate programs offered by IIMB will be exempt from GST under SI.No 66 of the Notification No 12/2017 CT(R) as amended. During the period 31st January 2018 to 31st December 2018, IIMB can avail the benefit of exemption under either Sl.No 66 or Sl.No 67 of Notification No 12/2017 CT(R) dated 28.06.2017 as amended.
b) IIMB will be eligible for exemption from payment of IGST in respect of supply of online journals and periodicals received from a person located in a non-taxable territory in terms of Sl.No 10 of Notification No 09/2017 IT (R) dated 28.06.2017 as amended.
18. The appeal is disposed off on the above terms.
Member