2025-VIL-96-AAR
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SGST Advance Ruling Authority

GST – Kerala AAR – Taxability of Leave Without Allowance (LWA) fees, Inspection fees, Self-financing educational institutions - Applicability of GST on fees collected from medical and paramedical staff who wish to avail of Leave Without Allowance (LWA) for private employment; and the fees collected from self-financing educational institutions for conducting departmental inspections and issuing No Objection Certificates (NOC) or Essentiality Certificates (EC) for starting new colleges or courses, or enhancing seats - Whether GST is applicable on the fees collected from medical and paramedical staff for availing LWA – HELD - GST is not chargeable on the fees collected from medical and paramedical officers, nursing staff under the Medical Education Department who wish to avail LWA for employment within the country or abroad. The LWA fees are collected as a deterrent and are in the nature of a policy penalty, rather than a contractual or commercial fee. The payment does not induce any special accommodation or confer any special entitlement, and therefore lacks the characteristics of a transactional exchange - The absence of reciprocal benefit or enforceable obligation indicates that the fee does not constitute consideration within the meaning of the CGST Act. The CBIC Circular No. 178/10/2022-GST clarifies that such deterrent or penal recoveries are not consideration for any supply and are therefore not taxable under GST - GST is not applicable on the fees collected from medical and paramedical staff for availing LWA – Ordered accordingly - Whether GST is applicable on the fees collected from self-financing educational institutions for conducting departmental inspections and issuing NOC/EC – HELD - GST is applicable to the fees collected from self-financing educational institutions for conducting departmental inspections and issuing NOC/EC for starting new colleges or courses, or enhancing seats. These services are rendered to the institutions themselves, and not to their students or staff, and are not incidental to the imparting of education. The institutions are considered "business entities" within the meaning of the GST law, and the services are rendered in the course or furtherance of their business operations – The CBIC Circular No. 234/28/2024-GST, provides detailed clarification on the taxability of affiliation-related services under GST, and the inspection and certification services provided by the Directorate of Medical Education are similar in nature and are liable to GST at the rate of 18% - GST is applicable on the fees collected from self-financing educational institutions for conducting departmental inspections and issuing NOC/EC.
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