GSTAT Order
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GST - Applicability of GST on Affiliation Services, Exemption under Entry 66 of Exemption Notification, Issuance of consolidated SCN for multiple tax period - Appellant engaged in field of education undertaking activities such as granting affiliation to schools, conducting public examinations and registering students - Show Cause Notice was issued proposing demand of tax alleging that affiliation services rendered by appellant do not fall within exemption entries 66(a), 66(aa), or 66(b)(iv) of the Exemption Notification No.12/2017-CT(Rate) dated 28.06.2017 - Whether affiliation services provided by appellant to schools constitute supply within the meaning of Section 7(1)(a) read with Section 2(17) of the CGST Act, 2017 and whether affiliation is an independent taxable supply falling outside the exemption under Entry 66(b)(iv) of the Exemption Notification - HELD - The affiliation services provided by appellant to schools constitute independent taxable supply not forming integral part of services relating to admission to or conduct of examination. Entry 66(b)(iv) of the Exemption Notification dated 28.06.2017 is confined to services relating to admission to or conduct of examination by an educational institution. The affiliation provided by appellant relates to defining and accrediting the functionality of the school which is much broader in scope compared to conduct of an entrance examination. Affiliation to the colleges by university is prerequisite for any college to admit students for the course offered. Only after affiliation is granted the interface with the university and the admission of students in the affiliated college will commence - The service of granting affiliation is not part of admission of students or conduct of examination for them. Appellant being a registered society under Societies Registration Act 1860 and not a statutory university constituted under any Parliamentary or State legislative enactment discharging compulsory statutory functions cannot avail benefit of decisions rendered exclusively in context of statutory bodies – The activities of appellant constitute supply under Section 7 read with Section 9 of the CGST Act and are chargeable to GST - The affiliation services provided by appellant including affiliation processing or form charges constitute independent taxable supply not falling within exemption and accordingly demand for affiliation fees for the period 18.06.2021 to November 2023 is upheld - Issuance of SCN for a consolidated period, covering various limitations and the order passed in furtherance thereto for a consolidated period is in accordance with the law or not – HELD – The CGST Act nowhere prohibits issuance of a common Show Cause Notice covering multiple tax periods where the issues arise from the same investigation or audit - The validity of the notice has to be examined with reference to compliance with limitation for each tax period individually, and not merely on the ground that several years have been clubbed together in a single notice - The statutory language of Sections 73(3), 73(4), 74(3) and 74(4) of the Act 2017, employs the expressions “for any period” and “for such periods”, in contradistinction to the expression “financial year” used in Sections 73(10) and 74(10) of the CGST Act, thereby expressly contemplating a notice covering a period spanning more than one financial year - Where a consolidated notice under Section 73 or Section 74 of the Act has been issued and the appellant has been afforded a full and fair opportunity to respond to the allegations therein, the mere fact of consolidation, in the absence of demonstrable prejudice, cannot vitiate or invalidate the proceedings under the GST regime. The appellant has not demonstrated any prejudice flowing from the consolidated format - The proceedings in this particular matter are not vitiated solely on the ground of the issuance of a consolidated SCN and order passed for a consolidated period covering July 2017 to November 2023 - Taxability Of Annual Registration and Late Registration Charges - Appellant contended that annual registration charges as well as late annual registration charges are in nature of affiliation fee for continuance of affiliation of schools being charged annually for continuance of affiliation in default whereof school would stand de-affiliated. Appellant contended that these charges should be exempted not only for period July 2017 to 17th June 2021 but also for subsequent period 18th June 2021 to November 2023 under the Exemption Notification - Whether annual registration charges and late charges qualify for exemption under Entry 66(b)(iv) of the Exemption Notification or receive benefit of regularization granted for affiliation charges - HELD - The annual registration charges as credited in books of account under head annual charges and collected from affiliated schools annually and failure to pay may result in de-affiliation are administrative and preparatory in nature. Exemption entry applies only to services expressly covered therein and exemption cannot be extended to administrative or preparatory charges – The strict construction rule mandated by Constitution Bench does not permit extension of exemption to activities that are preparatory to and not constitutive of conduct of examination. The fact that non-payment may lead to de-affiliation is commercial consequence of contractual obligation and does not transform administrative charge into examination related service - The Circular No. 234/28/2024 dated 11.10.2024 subject matter is confined to affiliation services simpliciter and there is no reference express or implied to annual registration charges renewal charges or late fees for registration as falling within ambit of regularization. Being clarificatory instrument issued in specific context of affiliation services its benefit cannot be extended by inference to distinct category of receipt merely because both arise from same underlying regulatory relationship - Exemption or regularization dispensation being in nature of fiscal concession must be strictly construed and scope cannot be enlarged by implication to categories of supply not expressly covered therein - The annual registration charges and late charges are independent supply distinct from services relating to admission of students or conduct of examinations and do not qualify for exemption - Finding of appellate authority upholding levy of GST on annual registration and late charges is affirmed - Cum-Tax Valuation Under Rule 35 of CGST Rules 2017 - Appellant contended that amounts collected by appellant if taxable at all should be treated as inclusive of GST under Rule 35 of the Rules 2017 - Whether amounts collected by appellant are to be treated as inclusive of GST under Rule 35 of the CGST Rules, 2017 – HELD - Where tax has not been collected separately, gross amount received must be treated as value of taxable service inclusive of tax for purpose of quantifying tax liability. Settled cum-duty or cum-tax jurisprudence developed under erstwhile Central Excise and Service Tax regime applies with equal force to valuation under the CGST Act. Burden placed upon appellant to independently establish GST inclusiveness stands discharged in law once it is demonstrated that no tax was separately collected from recipients - Where gross amount charged does not separately disclose tax component amount charged is to be regarded as inclusive of such tax - In present case first appellate authority has observed that no documentary evidence has been furnished by appellant to substantiate its version that fees collected were inclusive of GST. The burden of proof placed upon appellant is discharged – The appellant is entitled to benefit of cum-tax valuation under Rule 35 of the Rules 2017 and amounts collected by appellant are to be treated as inclusive of GST. This issue is decided in favour of appellant - Invocation of Section 74 of CGST Act 2017 - Fraud Wilful
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